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Okay, this is where I'm at, am I ready?
Old 01-24-2007, 06:59 AM   #1
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Okay, this is where I'm at, am I ready?

Hello, my handle is "Testtubes" ( I work in a lab). I am 54, and the game plan is to retire at 55 (8 months from now). My hope is to use this site to find answers to all of the questions I have before I go.
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Re: Okay, this is where I'm at, am I ready?
Old 01-24-2007, 07:05 AM   #2
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Re: Okay, this is where I'm at, am I ready?

Welcome, TT. I look forward to reading your posts.
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Re: Okay, this is where I'm at, am I ready?
Old 01-24-2007, 07:24 AM   #3
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Re: Okay, this is where I'm at, am I ready?

I see a bunch of people in here asking for opinions so it's my turn. Since we are all using usernames, I guess it doesn't hurt to divulge a little personal data.
I'm 54 and planning on early retirement at 55 which will be in Sept. By waiting till 55 I will hold on to my medical insurance provided by my employer. My wife retired 3 years ago after twenty five years in the classroom and she gets a reduced retirement benifit of around $1300/month. At 55 I will have a small monthly benifit that I cannot cash out of around $300/month plus my 401k balance of around $900,000.
So bottom line I will have around $1600 guaranteed monthly plus the income I can derive from $900k that will probably be invested with Edward Jones.
For the last 10 years I have waited to be in this position and in truth I have more than I thought I would have. But is it enough. I would really like to keep the lifestyle we live now and I think I would need to have an income of at least $60k to $70k annually to fund it.
I'm sure many of you are in the same boat. I live in rural America where the cost of living is not high.
I have always said that when I'm 55 I would be out of the door but as it approches I guess I'm kinda getting nervous.
What do you think
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Re: Okay, this is where I'm at, am I ready?
Old 01-24-2007, 07:41 AM   #4
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Re: Okay, this is where I'm at, am I ready?

Welcome, it looks to me that you have worked hard to retire financially stable.

My question for you is do you intend to access your 401k money before you are 59 1/2? If so, what is the plan for the access?

I also note you intend to invest the money from the 401k with Edward Jones. I'm curious why you have decided on that path.
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Re: Okay, this is where I'm at, am I ready?
Old 01-24-2007, 07:53 AM   #5
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Re: Okay, this is where I'm at, am I ready?

Well from what I understand, I will have to roll my 401K money into an IRA then draw from it under the rules of 72T. Under those guidelines I believe I can draw a maximum of about 64k/year but I will only draw 50 to 55 k or about 6% on my investment.
I have a friend that is with Edward Jones and they have a local office.
That said, I am open to any advise or other opinions. I am a novice at this for sure, and I welcome your input.
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Re: Okay, this is where I'm at, am I ready?
Old 01-24-2007, 08:05 AM   #6
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Re: Okay, this is where I'm at, am I ready?

Welcome TT,

If you leave your employer(retire) the year you turn 55 you can get at your 401K funds w/ no 10% penalty. If you roll over to an IRA - you will have to do 72t - more of a hassle.
What kind of expense ratio are you paying w/ Edward Jones. There have been some negative threads concerning them - I have never dealt with them so I don't know.
I would say you have enough to safely produce 45 - 55K - 60 -70K would be pushing it IMO.

Congrats on your near escape,

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Re: Okay, this is where I'm at, am I ready?
Old 01-24-2007, 08:08 AM   #7
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Re: Okay, this is where I'm at, am I ready?

Ttubes, welcome to the forum.

Have you run your numbers through FIRECalc?

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Re: Okay, this is where I'm at, am I ready?
Old 01-24-2007, 08:14 AM   #8
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Re: Okay, this is where I'm at, am I ready?

You did not say how much your combined SS benefit would be when you reach 62.

I think you're fine at 6%, since you only need maintain that rate for 7 years (55 to 62). Once you and your wife start collecting SS, you can reduce to 4% and be in the safe zone forever.

Welcome, and congratulations.

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Re: Okay, this is where I'm at, am I ready?
Old 01-24-2007, 08:14 AM   #9
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Re: Okay, this is where I'm at, am I ready?

Donzo, my goal of 60 to 70k would be a combination of the return on my 900k investment plus my guaranteed retirement income of approx. 19.2k. That means I would only need to make 40 to 50k annually on my 900k investment. Do you think that is a stretch? That's why I'm here, to get other opinions.

I am not actually with Edward Jones yet. My company pays all fees with Vanguard until I retire. I'm certainly open to hear about other financial firms if they would benifit me.
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Re: Okay, this is where I'm at, am I ready?
Old 01-24-2007, 08:19 AM   #10
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Re: Okay, this is where I'm at, am I ready?

Yes I forgot about Social Security. At 62, (seven years into early retirement) I will start drawing approx. 1400/month so I will be able to reduce my income from investments if neccessary.
My wife will not be able to draw SS because as a teacher she has never paid SS. Her retirement money comes from the Louisiana Teachers Retirement System and any benifit from SS from what I have paid into it would reduce her retirement income.
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Re: Okay, this is where I'm at, am I ready?
Old 01-24-2007, 08:24 AM   #11
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Re: Okay, this is where I'm at, am I ready?

Hi testtubes

I recommend clicking on the Advanced FireCalc tab, then looking for the classic version link after the first paragraph. The Classic Version puts everything on one page, making it easier to see what you are entering, minimizing mistakes, etc. SS amount entered is ANNUAL $.

Is 60 - 70K really the $ you want to cover expenses, or is that income in the wage sort of sense? Big difference.

I would suggest that you consider leaving your 401k at your employer for the time being, till you get up to speed on how/with who you want to invest it.
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Re: Okay, this is where I'm at, am I ready?
Old 01-24-2007, 08:29 AM   #12
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Re: Okay, this is where I'm at, am I ready?

Welcome to the board, TT. I merged your two topics into this combined thread.

I can't tell from your posts, but it looks like you may want to make sure you know what your expenses are before you decide how much that $900K "needs" to produce. Your plan looks fine but if you haven't already run the detailed expenses (not just a lifestyle estimate) through FIRECalc then you'll sleep better at night.

I think you're gonna hear a lot of feedback about your thoughts on moving from Vanguard to E.J. If you have a "friend" at E.J. then I'd say that you need a new set of friends.
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Re: Okay, this is where I'm at, am I ready?
Old 01-24-2007, 08:36 AM   #13
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Re: Okay, this is where I'm at, am I ready?

TT welcome to the boards. I'm new here myself. I too would recommend a long talk with your 401K rep. Depending upon how the 401 is set up you could take your funds from it with out the 10 % penalty if the employer set it up that way. If not you'll end up paying the 10 %. BTW if your 401 is in Vanguard you could probably roll it to a self managed account in Vanguard for a lot less than having EJ do it. DW is a former BOA for EJ and IMHO they are good at helping people buy and hold investments who need the help. You're already most of the way there being in Vanguard.
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Re: Okay, this is where I'm at, am I ready?
Old 01-24-2007, 12:37 PM   #14
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Re: Okay, this is where I'm at, am I ready?

Quote:
Originally Posted by testtubes
I see a bunch of people in here asking for opinions so it's my turn. Since we are all using usernames, I guess it doesn't hurt to divulge a little personal data.
I'm 54 and planning on early retirement at 55 which will be in Sept. By waiting till 55 I will hold on to my medical insurance provided by my employer. My wife retired 3 years ago after twenty five years in the classroom and she gets a reduced retirement benifit of around $1300/month. At 55 I will have a small monthly benifit that I cannot cash out of around $300/month plus my 401k balance of around $900,000.
So bottom line I will have around $1600 guaranteed monthly plus the income I can derive from $900k that will probably be invested with Edward Jones.
For the last 10 years I have waited to be in this position and in truth I have more than I thought I would have. But is it enough. I would really like to keep the lifestyle we live now and I think I would need to have an income of at least $60k to $70k annually to fund it.
I'm sure many of you are in the same boat. I live in rural America where the cost of living is not high.
I have always said that when I'm 55 I would be out of the door but as it approches I guess I'm kinda getting nervous.
What do you think
Welcome testtubes. I would second the advice to run your numbers through FIRECalc, but before you do that you should get a better handle on your living expenses. The wording in your post leads me to think that you are not all that sure of how much you willl need to retire. Also note that whether your pensions are COLAed or not will make a difference.
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Re: Okay, this is where I'm at, am I ready?
Old 01-24-2007, 02:11 PM   #15
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Re: Okay, this is where I'm at, am I ready?

TT,

With the pensions, SS and your savings the 70K should be doable

As suggested earlier - it would be a good idea to leave your 401K w/ Vanguard. They are low cost, solid and won't try and "churn" you.
They have all the investment choice needed to be well diversified too.

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Re: Okay, this is where I'm at, am I ready?
Old 01-24-2007, 02:47 PM   #16
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Re: Okay, this is where I'm at, am I ready?

TT,

Since everyone was giving you the thumbs up without refering to a FIRECalc run I decided to make a couple for you. If your pension is COLAed you will have a 79.2% success rate of sustaining a lifestyle requiring $70K/yr (adjusted for CPI) for 40 yrs. If it is not COLAed that success rate drops to 62.5%. These success rates do not instill in me a great level of confidence, therefore I will repeat my suggestion to you to determine with greater accuracy the amount of your expenses and make some FIRECalc runs for yourself.

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Re: Okay, this is where I'm at, am I ready?
Old 01-24-2007, 04:34 PM   #17
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Re: Okay, this is where I'm at, am I ready?

Welcome Testtube.

It really looks doable.

You have medical a 1600 guranteeeee right now, what about your mortgage? Any??

Part time fun work?

Glad to have you aboard!
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Re: Okay, this is where I'm at, am I ready?
Old 01-25-2007, 07:57 AM   #18
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Re: Okay, this is where I'm at, am I ready?

Answering a few questions:
Is my pension COLAed? Im guessing that is asking me if my pension is adjusted for cost of living. The answer would be that my wifes portion is ($1300), but the Louisiana Teachers Retirement Program only makes small adjustments once every 5 years or so. My portion which is really an old annutiy that I cannot cash in ($300) does not adjust for cost of living
Do I have a morgage? no, the home has been paid off for years. I do however, have a motorhome that I am paying on.
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Re: Okay, this is where I'm at, am I ready?
Old 01-25-2007, 09:35 AM   #19
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Re: Okay, this is where I'm at, am I ready?

Quote:
Originally Posted by testtubes
Answering a few questions:
Is my pension COLAed? Im guessing that is asking me if my pension is adjusted for cost of living. The answer would be that my wifes portion is ($1300), but the Louisiana Teachers Retirement Program only makes small adjustments once every 5 years or so. My portion which is really an old annutiy that I cannot cash in ($300) does not adjust for cost of living
Based on the way you describe the pensions I would use the not COLAed results.

Quote:
Originally Posted by jdw_fire

If it is not COLAed that success rate drops to 62.5%. These success rates do not instill in me a great level of confidence
Now there are 2 ways to increase this success probability. 1) increase the size of your portfolio or 2) decreases your yearly expenses, so...

Quote:
Originally Posted by jdw_fire

therefore I will repeat my suggestion to you to determine with greater accuracy the amount of your expenses and make some FIRECalc runs for yourself.
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Re: Okay, this is where I'm at, am I ready?
Old 01-25-2007, 10:54 AM   #20
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Re: Okay, this is where I'm at, am I ready?

Quote:
Originally Posted by jdw_fire
Since everyone was giving you the thumbs up without refering to a FIRECalc run I decided to make a couple for you. If your pension is COLAed you will have a 79.2% success rate of sustaining a lifestyle requiring $70K/yr (adjusted for CPI) for 40 yrs. If it is not COLAed that success rate drops to 62.5%.
The OP said 60 to 70K. I did not run firecalc, but my ballpark guesstimate is that he should be ok at 60K.
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