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One less year?
Old 06-17-2016, 09:42 AM   #1
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One less year?

58, DW 53. 2 16yr old sons.
IRA/401k = 1.29m, contributing max. All index funds. AA is 73/21/6
Highest expenses in the last 6 years = 104k. Rolling 5 yr average 92k.
His SS @ 70 = 40k
Her SS @ 70 = 12k
Sell house in 2019 = net 275k

If I wait till 2018, I think Iím good to go. What Iím trying to get comfortable with is retiring at the end of this year. Running Firecalc gives me an 81% success rate given the above plus the following assumptions:
1) Expenses for 2017 & 2018 at 135k (add health care)
2) Not included in those calculations:
a. 83k in 529. Son1 Navy, son2 community college for 1st 2 yrs. Those are their stated plans.
b. Her pension = $60k, though not sure when she can collect or lump sum vs payments
c. Any cash/liquid/non tax advantaged assets available at the start of 2017.
3) No income. The likelihood is that for I could/would consult or work part time for the company Iím leaving and/or a few other contacts Iíve made over the years. DW has also threatened to go back to work if Iím home all day.

Too risky?
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Old 06-17-2016, 10:05 AM   #2
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Remember her SS is greater of her own vs 1/2 of yours so that may bump her up to 20K - a big difference!

Also, when calculating SS are you using the SS retirement estimator and inputting estimated income for years from now to age 70? - Could possibly reduce SS income if some of those years are included in the highest 35 years of earnings.
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Old 06-17-2016, 10:27 AM   #3
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Thanks wmc. I was using her SS, not half mine which is larger. SS doesn't give me access to the calculator, so it is based on my SS estimated benefits. So if I stop working in 2017 and don't apply for benefits till 2028, my lack of earnings for 11 years reduces my benefit?
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Old 06-17-2016, 11:00 AM   #4
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SS doesn't give me access to the calculator.....
https://www.ssa.gov/retire/estimator.html
Can run your own numbers including whatever income (or lack thereof) you expect in future years. Just let it run the way it normally does and then in the results page, click "add an new estimate". Allows you to set a retirement age and whatever income (0?) after that point.
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Old 06-17-2016, 11:15 AM   #5
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Yes, your initial estimated SS income is based on your current earnings staying the same each year until you claim SS
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Old 06-17-2016, 11:25 AM   #6
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Have you gone through this list?

Some Important Questions to Answer Before Asking - Can I Retire?

Have you priced out health insurance, either on the applicable marketplace or through an agent? Also, remember to have a cash cushion for deductibles and also a fund for home repairs, car replacements, etc.

When you sell the house, where will you live? Will this affect your expenses one way or the other?

Sounds like you are pretty close, congratulations!
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Old 06-17-2016, 11:47 AM   #7
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Originally Posted by rjsob58 View Post
Running Firecalc gives me an 81% success rate given the above plus the following assumptions: [...]
Too risky?
Personally I don't like 81%. 90% sounds a lot better to me. Maybe you can get 90% if you fiddle with your planned spending or other assumptions, though. I agree with mbaustin, it sounds like you are close so congratulations!
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Old 06-17-2016, 11:50 AM   #8
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https://www.ssa.gov/retire/estimator.html
Can run your own numbers including whatever income (or lack thereof) you expect in future years. Just let it run the way it normally does and then in the results page, click "add an new estimate". Allows you to set a retirement age and whatever income (0?) after that point.
So I ran the estimator using my earnings record, stopping at 2017. It shows benefits of $1894/mo at 62. If I delay till taking benefits till 70, how do I calculate that?
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Old 06-17-2016, 11:58 AM   #9
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Originally Posted by MBAustin View Post
Have you gone through this list?

Some Important Questions to Answer Before Asking - Can I Retire?

Have you priced out health insurance, either on the applicable marketplace or through an agent? Also, remember to have a cash cushion for deductibles and also a fund for home repairs, car replacements, etc.

When you sell the house, where will you live? Will this affect your expenses one way or the other?

Sounds like you are pretty close, congratulations!
I did price health insurance through the marketplace and that's included in my estimates. My estimated expenses also includes data for the past 16+ years which includes new cars, kids braces, home repairs, etc - so I think the average is sound.

We don't know where we'll live, but we are in a very HCOL area (n. va) and will go to a LCOL area. My expenses includes my current mortgage, pp tax, insurance, so that should go down with a smaller, less expensive house or rent.

I'm hoping I have enough fudge factors built in, but now I think I've screwed up the SS estimates as that was based on my current SS statement.
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Old 06-17-2016, 12:14 PM   #10
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Originally Posted by rjsob58 View Post
So I ran the estimator using my earnings record, stopping at 2017. It shows benefits of $1894/mo at 62. If I delay till taking benefits till 70, how do I calculate that?

Based on your age, it looks like your full retirement age is 66 years, 8 months. Taking at 62 will be 71.7% of your FRA benefit. Therefore, your numbers (very roughly), would be something like:

67: $2,640 per month
70: $3,270 per month

That's not exact, but should be in the ballpark.
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Old 06-17-2016, 12:22 PM   #11
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Originally Posted by rjsob58 View Post
So I ran the estimator using my earnings record, stopping at 2017. It shows benefits of $1894/mo at 62. If I delay till taking benefits till 70, how do I calculate that?
In your new case, set age to stop working = 70 yrs old. Program assumes you collect SS after you stop working.

In your new case, estimate your average yearly income between now and then and input it. It assumes you'll earn that much each year until retirement. Since you can only put in one number and you only plan to work until 60 yrs old, it would be conservative to just put zero here. You could average out your salary through 70 (two years of salary and a few of 0 salary), but I'm not sure how it handles that so I took the conservative route when I ran it.

Not perfect but I hope this helps.

Edit: compare results to what Prospective Bum just provided to see if they seem reasonable.
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Old 06-18-2016, 07:26 AM   #12
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Your info and knowledge about your DW's pension seems vague and as it will become the most important component of your post retirement income you should clarify the details before going much further. When does she plan to retire?

Regarding the safety factor of 81%, that number is actually quite risky in my opinion.
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Old 06-18-2016, 07:59 AM   #13
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81% and your DW is only 53...very risky IMO.

Work on your expense number should have some room to cut a little there.

Dump the 275 asset number from the sale of your house, your plans are way too vague to include that number, what you have done is just include your home equity on your income sheet, not proper.

My most important advise to someone your ages starting a long period of self-payed health care..Study, study, study, ACA rules. Cut out all 401 contributions that aren't employer matched and save, save , save some after-tax cash for living expenses. You need to know exactly how ACA works. You are entering the worst ages for private pay and lowering your health insurance costs as much as possible is your number one goal.You will be insuring 4 people for probably at least 5 years. Do yourself a favor and start studying this right now.
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Old 06-18-2016, 01:01 PM   #14
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Early retirement can be a one way street at our ages (we are 56 and 53). Given that I wanted a high rate of success and a low initial WR. I had 100% in FireCalc and only 5% leeway to spend more, and a 3% initial WR. The WR included my spouses salary which is approximately the same as his SS (he will retire at 62 and the immediately collect SS). I did not include my potential SS when using any online tools. I also included medical expenses of $30k / year (covers DH and I). I did not assume it would go down with Medicare as I assume I will have to outsource some services (housekeeping, lawn mowing, etc) as we age.

I am a worrywart by nature so I'm assuming that I will leave a large bequest at EOL, but I'd rather that vs being a bag lady under a bridge at the age of 90.

I think if you do some more research and tweak your numbers that you will be able to retire very soon, but you'll have work to do before that.

All the best
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Old 06-20-2016, 07:17 AM   #15
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To play Devil's Advocate, while respecting the expert advice above, it seems like you have built in some good fudge factors, as you say, or insurance policies. You have health care figured out, kids will be out of the nest soon, you want to move to a LCOL area, you have part time work opportunities, and there seems to be some deferred comp coming for your wife. Also, plenty of people here live happily on half of your average annual spending, so if you are really driven to retire, it's a matter of lifestyle choices. I am 50 and working so keep that lack of experience in mind but I do worry about some folks who really want to FIRE not doing it because of financial math, which is the math that can be managed in lots of ways. The kind that cannot be managed as well is health and longevity-related and work can make those latter numbers smaller.
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Old 06-20-2016, 08:44 AM   #16
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I've got some things to think about & research, but fortunately I have time to do that as I don't have to make a decision anytime soon. If I need to wait an additional 3 or 6 months into 2017 I will. And part of that will depend on negotiations with work.
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Old 06-20-2016, 10:45 AM   #17
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I've got some things to think about & research, but fortunately I have time to do that as I don't have to make a decision anytime soon. If I need to wait an additional 3 or 6 months into 2017 I will. And part of that will depend on negotiations with work.
An excellent plan. Hang around here and learn from our successes and mistakes whie you continued your research. You will do fine!
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