Planning to Retire at 55

[klbvbb01]

Hi everybody

I found this site several weeks ago and am reading through a lot of the topics on the forums. There’s a lot of useful discussions, smart people and this site is great!

I’m planning to retire from a large corporation later this year when I turn 55.

Below is a summary of our stats. Are we positioned reasonably well to do this? What do you think?

Ages and family:
- Me: 54.5
- DW: 63
- No kids
- One parent alive and not expected to require much financial support.
Retirement savings: $2,052,000
Accounts as follows:
401K: $847K
IRA: $298K
Taxable Accounts: $907K

Asset allocations:
US Stocks: 60%
Non-US Stocks: 4%
Bonds: 29%
Real Estate: 3%
Cash: 4%

Home: Paid for.

Other debt: None

Pension (private sector) begins at age 55: $60,588/year – 5.7% of lump sum (100% joint & survivor annuity, no COLA) or can take $1,063,000 lump sum.


Social Security for me (age 62) : $21.6K
Social Security for DW (age 66) : $10.8K

Annual Living Expenses : $100,000
- Includes recent quote on retiree medical plan from megacorp
- Based on actual living expenses over the last few years.
- Does not include state (6% Louisiana),federal or property taxes
- I have assumed 20% tax rate so $125,000 gross = $100,000 ATAX

FIRE Calculator 35 year retirement: 96.3% success ($125K/year, annuitize pension, 3% inflation, total market (50% stock/50% bond), social security for me and wife


FIRE Calculator 35 year retirement: 94.5% success ($125K/year, take lump sum pension, 3% inflation, total market (50% stock/50% bond), social security for me and wife


Vanguard Nest Egg Calculator: 94% success

CALCX.COM Calculator 35 year retirement: (4.5% return, take lump sum pension, 3% inflation, social security for me and wife) $1,064,000 remaining after 35 years.


Thank You

 

[jerome len]

Without studying everything I'd try to buy into a Roth IRA with some of your funds....they would be tax free for many years before you would need them and I'd look at taking SS later, which is like getting almost 8% more each year.....especially i your family history would lead you to believe that you hae a long life ahead. You've done well financially, congratulations.

 

[InTheSticks]

Congrats. It looks like you are in good shape. You only have about 10 weeks before the end of the year. Have you told megacorp of your plans?

 

[klbvbb01]

Without studying everything I'd try to buy into a Roth IRA with some of your funds....they would be tax free for many years before you would need them and I'd look at taking SS later, which is like getting almost 8% more each year.....especially i your family history would lead you to believe that you hae a long life ahead. You've done well financially, congratulations.

Thanks jerome len

I guess once I retire and dont have earned income they will let me transfer some monry to ROTH's.

 

[jcretire77]

Welcome. Congratulations. Your numbers look very doable. Myself 55 and thinking of pushing until I am 56. We have a similar spending rate and are at 2.8, 1.2 taxable, 1.6 deferred, no pension. I'd like to be over 3.0 before quitting. ID tax is 7%, I also assume about 20% for taxes.

I like to run numbers through Fidelity R.I.P., I-ORP, etc to make myself feel good that we are close to saying Adios to the j*b. Everything I run says we could bail today especially because I am budgeting for much more than we have spent the last three years.

 

[klbvbb01]

Congrats. It looks like you are in good shape. You only have about 10 weeks before the end of the year. Have you told megacorp of your plans?

Thank you InTheSticks

I told them 4/15/15 unless I can work only 3 days per week (want more time with family/kids/grandkids). We will see.

 

[klbvbb01]

Welcome. Congratulations. Your numbers look very doable. Myself 55 and thinking of pushing until I am 56. We have a similar spending rate and are at 2.8, 1.2 taxable, 1.6 deferred, no pension. I'd like to be over 3.0 before quitting. ID tax is 7%, I also assume about 20% for taxes.

I like to run numbers through Fidelity R.I.P., I-ORP, etc to make myself feel good that we are close to saying Adios to the j*b. Everything I run says we could bail today especially because I am budgeting for much more than we have spent the last three years.

Thank You jcretire77

I will try to run numbers through Fidelity R.I.P. and I-ORP to compare.

 

[braumeister]

Annual Living Expenses : $100,000
- Includes recent quote on retiree medical plan from megacorp
- Based on actual living expenses over the last few years.
- Does not include state (6% Louisiana),federal or property taxes

Welcome. 55 is the perfect time to retire (that's when I did so it must be).

You're probably fine, but ...

Instead of basing your expense forecast on your recent experience while w*rking, I think it's important to seriously figure out what they will be afterward. Could be quite different. Also, to estimate taxes and include them as an expense (plenty of calculators for that).

 

[klbvbb01]

Thanks braumeister

Projected actual retirement spending = 80K$ ATAX = 110K current - 18K$ P&I (just paid off home) - current ATAX savings which will stop.

Ran numbers on 100K$/year ATAX to give us some play room.

 

[heeyy_joe]

Well done, you are good to go.

 

[rodi]

I plugged in your numbers to firecalc and it gave 100% success. Not sure how you came up with 94.5%.
Did you enter the extra income (SS, Pension) on the appropriate tab? When all that kicks in - you're covering a huge portion of your expenses.

 

[klbvbb01]

Thank You heeyy_joe

 

[stepford]

My numbers are similar, but I'm planning to make a go of it with with significantly less pension than the OP and significantly smaller savings than JCRetire77. I'll be at 0.9M taxable, 1.1M deferred with a $33K/yr non-COLA'd pension (includes retiree medical) and I expect to make the jump on or about my 55th birthday next summer.

The one (huge) saving grace in my plan is that DW will continue to work part time and will have a COLA'd state pension 50% larger than my own (plus a few $100K additional savings) when she drops out to join me at 60.

Of course, the other saving grace is that DW and I are both pretty frugal (as ex-grad students are wont to be) and have after tax expenses typically in the $60-70K/yr range...

 

[retire2020]

You are in very good position..fire any time. 65K on 2M portfolio…3.2% WR + SS is very much doable.

 

[Cobra9777]

Congrats. Looks like you are good to go. You have a big decision coming up on the pension. There are plenty of threads here on lump sum vs annuity. It was an excellent resource when I was making the same decision last year.

 

[EastWest Gal]

If your annual living expenses are $100K and your pension is $60K, you will only need to w/d $40K/yr to start . What you withdraw from taxable accounts isn't income. You ought to be able to spend more on whatever you want (big hint: travel) than you thought. I don 't know if you saw this, but Kiplinger has info on state tax situations for retirees. You live in one of the top 10 tax friendly states for retirees. Congratulations. You look good to go.


Sent from my iPhone using Early Retirement Forum

 

[Midpack]

The only nit I noticed was using 35 years in FIRECALC. Age 95 is the typical end of plan, so 40 years might be suggested if you plan to retire at 55. But that's your call, you know what makes sense for you.

In any event, you're in very good shape with very mainstream plan features (a positive), including a healthy non-COLa pension, congrats! Many have/will retire with much less.

 

[pb4uski]

20% for taxes sounds way high. Use Turbo Tax or Taxcaster to do a pro forma return assuming you are retired

 

[klbvbb01]

20% for taxes sounds way high. Use Turbo Tax or Taxcaster to do a pro forma return assuming you are retired

Thanks a bunch pb4uski

 

[klbvbb01]

The only nit I noticed was using 35 years in FIRECALC. Age 95 is the typical end of plan, so 40 years might be suggested if you plan to retire at 55. But that's your call, you know what makes sense for you.

In any event, you're in very good shape with very mainstream plan features (a positive), including a healthy non-COLa pension, congrats! Many have/will retire with much less.

Thank you Midpack.

 

[klbvbb01]

If your annual living expenses are $100K and your pension is $60K, you will only need to w/d $40K/yr to start . What you withdraw from taxable accounts isn't income. You ought to be able to spend more on whatever you want (big hint: travel) than you thought. I don 't know if you saw this, but Kiplinger has info on state tax situations for retirees. You live in one of the top 10 tax friendly states for retirees. Congratulations. You look good to go.


Sent from my iPhone using Early Retirement Forum

Thanks EastWest Gal

I will take a look at Kiplinger

 

[klbvbb01]

Congrats. Looks like you are good to go. You have a big decision coming up on the pension. There are plenty of threads here on lump sum vs annuity. It was an excellent resource when I was making the same decision last year.

Thank you Cobra9777

Can you tell possibly tell me what you ended up doing and why?

I have read some of the post's and they seem to recommend annuitizing a part of your assests which lower the SWR on remaining assests. If you know of any specific really good posts on this please let me know.

 

[klbvbb01]

You are in very good position..fire any time. 65K on 2M portfolio…3.2% WR + SS is very much doable.

THANK yOU retire2020

 

[klbvbb01]

My numbers are similar, but I'm planning to make a go of it with with significantly less pension than the OP and significantly smaller savings than JCRetire77. I'll be at 0.9M taxable, 1.1M deferred with a $33K/yr non-COLA'd pension (includes retiree medical) and I expect to make the jump on or about my 55th birthday next summer.

The one (huge) saving grace in my plan is that DW will continue to work part time and will have a COLA'd state pension 50% larger than my own (plus a few $100K additional savings) when she drops out to join me at 60.

Of course, the other saving grace is that DW and I are both pretty frugal (as ex-grad students are wont to be) and have after tax expenses typically in the $60-70K/yr range...

Thank you for your information stepford. Enjoy.

 

[klbvbb01]

I plugged in your numbers to firecalc and it gave 100% success. Not sure how you came up with 94.5%.
Did you enter the extra income (SS, Pension) on the appropriate tab? When all that kicks in - you're covering a huge portion of your expenses.

Thanks rodi

I put 3114K$ (pension lump sum + current investable assets), 50/50 total market, 3% inflation, 125K$ year spend, 35 year retirement, 21.6K$/year my SS at 62, 10,404$/year wife SS at 66, 1% annual fee costs (instead of 0.18% in program). I get 94.5% from Firecalc.