One year or 2 1/2 years away from FIRE. Advice?

[cinman2000]

I've been diving into the great info here the last couple of weeks. Very helpful!
Here are my stats:

I'm 52, my wife is 50. We have 1.8 mil in investment accounts + 150k in primary residence. Our mortgage will be paid off in 5 years. We have been aggressive investors and held tight during the recession. We have recently done a year by year projection of expenses from now until end of life. We have two daughters 16 and 19. Included in our plan is 100k each for their college and 12k each for weddings. Planning for a RV purchase at retirement time and car replacements every 5 years until age 80. Planning for an international vacation every 4 years until age 85. Planning out of pocket healthcare expenses at 10K per year based on info I have found here (we are very fit and healthy). Our expenses are fairly high now paying for college and having one kid still at home. Over the next 6 years annual expenses are projected at 148k. Once the kids are independent and we are not working it drops dramatically to about 73k. Planning to beat inflation by about 2.8% average with our investments and estimating our tax rate to be the same as while working.

My excel spreadsheet show that retirement this December is viable. Putting these numbers in FIREcalc gives us about a 96% and it only increases by one percent each year if we delay retirement. Quicken also confirms a successful plan.

My dilemma is that I believe this to be a conservative plan, am burned out in my job and want to FIRE in December of 2014. I think I may be battling uphill however when it comes to my wife and my financial planner.

Any holes you see in my plan or advice for negotiations will be greatly appreciated

 

[REWahoo]

I think I may be battling uphill however when it comes to my wife and my financial planner.

Any holes you see in my plan or advice for negotiations will be greatly appreciated

Dump your financial planner. That eliminates one battle and reduces your investment costs.

Negotiate with your wife how much longer she needs to work before she feels comfortable joining you in retirement. Pledge her your full support during that time.

 

[MichaelB]

My excel spreadsheet show that retirement this December is viable. Putting these numbers in FIREcalc gives us about a 96% and it only increases by one percent each year if we delay retirement. Quicken also confirms a successful plan.

My dilemma is that I believe this to be a conservative plan, am burned out in my job and want to FIRE in December of 2014. I think I may be battling uphill however when it comes to my wife and my financial planner.

Any holes you see in my plan or advice for negotiations will be greatly appreciated

Congratulations on what you have achieved so far! Holes? Just one, but it'll go away when you drop the planner. A spouse with concerns is rational and to be expected. It doesn't have to be a battle, and concerns are easier to deal with when they are very specific. Help her express them as precisely as possible.

 

[Live And Learn]

your numbers are close to mine. I have no school to pay for but I'm estimating my expenses at 87k because I'm including healthcare at 28k per year ! With your HC numbers I'd be where you are at.

How many years did you put into Firecalc ?

 

[cinman2000]

How many years did you put into Firecalc ?

50. another conservative input

 

[MikeWillRetire]

I'm curious what you assumed for social security.

 

[cinman2000]

I'm curious what you assumed for social security.

For Social Security I used the quote directly from the SS website assuming no more income. This should be a bit conservative as it won't include our 2014 income, but does assume no reduction in benefits and that SS keeps up with inflation....thoughts?

 

[Live And Learn]

50. another conservative input

Excellent !

Did you use the default 75 / 25 Asset Allocation ? And if so, does it match your current allocation ?

FYI - I only use 65% of my potential social security when I run these calculators.

 

[cinman2000]

Excellent !

Did you use the default 75 / 25 Asset Allocation ? And if so, does it match your current allocation ?

FYI - I only use 65% of my potential social security when I run these calculators.

Great question! I did use the default and my actual is closer to 65/35. Changing that did not make a difference.

Since I am only 10 years away from potentially qualifying for SS, 65% seems pessimistic. I will try bumping it down from 100 though. Thanks for the feedback!

 

[Live And Learn]

Since I am only 10 years away from potentially qualifying for SS, 65% seems pessimistic. I will try bumping it down from 100 though. Thanks for the feedback!

Make sure you are using 2014 as your "stop work year" in the Social Security estimator. You can't use what is on the statement since it assumes you work until full retirement age.

My entire budget is pessimistic .... Like you, I'm afraid of jumping too soon so I've built in way too many contingencies (see my tag line - when things look too good I just up the contingencies !!)

 

[imoldernu]

Kudos on your year by year planning:

We have recently done a year by year projection of expenses from now until end of life. We have two daughters 16 and 19. Included in our plan is 100k each for their college and 12k each for weddings. Planning for a RV purchase at retirement time and car replacements every 5 years until age 80. Planning for an international vacation every 4 years until age 85. Planning out of pocket healthcare expenses at 10K per year based on info I have found here (we are very fit and healthy). Our expenses are fairly high now paying for college and having one kid still at home. Over the next 6 years annual expenses are projected at 148k. Once the kids are independent and we are not working it drops dramatically to about 73k. Planning to beat inflation by about 2.8% average with our investments and estimating our tax rate to be the same as while working.

While we're in a somewhat lower income range, the year to year planning was the key to our retirement comfort level. Looking ahead and seeing where changes will take place in the early years is one of the most important parts of planning ER, IMO. The later years, not so important.

I love the international vacation @ 85... DW and I are planning for our 85th celebration in about 7 years... Expect to share a Meals on Wheels feast with our next door neighbor...

 

[cinman2000]

I love the international vacation @ 85... DW and I are planning for our 85th celebration in about 7 years... Expect to share a Meals on Wheels feast with our next door neighbor...

Thanks for the perspective and the chuckle. Optimistic on the spending and conservative on the income hopefully makes for success

 

[BigE]

Welcome cinman2000. Not yet retired and 3 years behind you but looking for same rough time frame to ER (53-55). I agree with the thoughts on re-evaluating your need for a financial planner and if he/she is taking a percentage then that needs to be figured into firecalc (ie, it's going to be greater than the default 0.18%). You seem to really be on the schtick with your finances and so I think taking over all financial issues with a little Boglehead help would be very easy for you. Healthcare is the big black hole of the unknown. 10k/year would be awesome but may be overly optimistic; I lean toward Live and Learn's allocated 28k, but I'm waiting like everyone else to see what shakes out with the ACA. I also tend to differ in my expectation of longevity. I think planning to live to 100 plus is kind of silly unless you live on tofu and granola and have a genetic makeup for longevity. Please keep us posted on your progress.

 

[travelover]

........ We have recently done a year by year projection of expenses from now until end of life.........

How did you figure this out? I still don't know when I'm going to die.

 

[cinman2000]

How did you figure this out? I still don't know when I'm going to die.

My side of the family has been kicking it well into the 90's, so I went conservative and went with 103 If it's earlier, I won't know the difference

 

[cinman2000]

Healthcare is the big black hole of the unknown. 10k/year would be awesome but may be overly optimistic; I lean toward Live and Learn's allocated 28k, but I'm waiting like everyone else to see what shakes out with the ACA.

I found a thread on here where the consensus was 5k per person per year. We did have some family health issues in 2012 and still only had $3,500 out of pocket. Checked with my 80 year old dad covered by Medicare and his out of pocket is quite low also. Guess I will keep researching

 

[imoldernu]

I found a thread on here where the consensus was 5k per person per year. We did have some family health issues in 2012 and still only had $3,500 out of pocket. Checked with my 80 year old dad covered by Medicare and his out of pocket is quite low also. Guess I will keep researching

Here are our actual basic costs for healthcare (Medicare)... (total for 2)
Monthly:

Medicare A=B $104.90 X 12 = $1258.80
Medicare D (drugs) $38.00 x 12 = $456.00
Blue Cross Medicare supplement $156.00 = $1872.00
Medicare Doctor deductible $146.00 (one time) = $146.00
Not included here Hospital Deductible $1256 (one time)

Total$3586.80
For 2, that's $7173

In our case, prescription meds net additional $960
OTC meds...for (2) $200
Dental avg. for (2) $2000
Optical avg. for (2) $300

Total all medical $10,633 Plus or minus $1500 on average.

One of the things that can add up, are some of the more expensive medications. While medicare takes care of catastrophic costs, the amount that is counted towards the doughnuthole, is the full price of the drugs not the discounted price. DW was prescribed "Prolia" an $1800 price for a single one time injection. In our senior neighborhood, it is not too uncommon to hear people hit the doughnut hole by June or July... Like most of the folks here, we were almost prescription free into our early 60's.

Some more info on our retirement costs, Social Security and our struggle through poverty here:
http://www.early-retirement.org/forums/f27/sharing-23-years-of-frugal-retirement-62251-3.html

 

[obgyn65]

I have no particular advice other than what has already been said. Welcome to the forum.

 

[supernova72]

Here are our actual basic costs for healthcare (Medicare)... (total for 2)
Monthly:

Medicare A=B $104.90 X 12 = $1258.80
Medicare D (drugs) $38.00 x 12 = $456.00
Blue Cross Medicare supplement $156.00 = $1872.00
Medicare Doctor deductible $146.00 (one time) = $146.00
Not included here Hospital Deductible $1256 (one time)

Total$3586.80
For 2, that's $7173

In our case, prescription meds net additional $960
OTC meds...for (2) $200
Dental avg. for (2) $2000
Optical avg. for (2) $300

Total all medical $10,633 Plus or minus $1500 on average.

One of the things that can add up, are some of the more expensive medications. While medicare takes care of catastrophic costs, the amount that is counted towards the doughnuthole, is the full price of the drugs not the discounted price. DW was prescribed "Prolia" an $1800 price for a single one time injection. In our senior neighborhood, it is not too uncommon to hear people hit the doughnut hole by June or July... Like most of the folks here, we were almost prescription free into our early 60's.

Some more info on our retirement costs, Social Security and our struggle through poverty here:
http://www.early-retirement.org/forums/f27/sharing-23-years-of-frugal-retirement-62251-3.html

_____
Silly question here: The Medicare cost of $104.90 a month...is what gets deducted from you SS check? I'm thinking the Medicare supplement of $156.00 is what some refer to as "Medigap" insurance (for the 20% Medicare does not cover). In our retirement planning stuff at work they keep reminding us that Medicare is not "free" once we can draw it at 65. Cheers.

 

[Live And Learn]

Here are our actual basic costs for healthcare (Medicare)... (total for 2)

Thank you ImOlderNU. Real life experience like this is invaluable ... AKA PRICELESS !!!