Planning to retire this year at 55

[HeloDog]

Hi everybody!

I found this site a few weeks ago and I’m starting to read through a lot of the topics in the various forums. There’s quite a bit of useful, thought provoking discussions to explore. It’s fantastic!

I’m planning to retire from a large corporation later this year when I turn 55. My wife is planning to retire from her job early next year.

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

Ages and family:
- Me: 54
- DW: 48
- No kids;
- Our parents are alive; not expected to require much financial support. But time will tell.

Retirement savings: $2,000,000
Our accounts are organized as:
401K: $1.1M
IRA: $70K
Taxable Accounts: $830K

Asset allocations:
US Stocks: 43%
Non-US Stocks: 12%
Bonds: 33%
Real Estate: 6%
Commodities: 4%
US Saving bonds: 2%
Cash: 2%

Home: Paid for.

Other Debt: None

Pension (private sector) begins at age 55: $56,000/year.
- No COLA
- In my plans, I’ve been using the 50% survivor option
- I still need to run numbers for a survivor scenario as the FAQ suggests to see if the plan still works if I kick the bucket next year.

To be a little conservative on social security, I have been assuming 50% of the SSA estimate.
- Social Security for me (age 67 FBA x 50%) : $16K
- Social Security for DW (age 67 FBA x 50%) : $12K

Annual Living Expenses : $78,000
- Includes recent quote on retiree medical plan from megacorp and long-term care insurance plan for both of us
- Based on actual living expenses over the last 6 years.
- Does not include state, federal or property taxes
- Last two year have been lower than the previous 4 years.

We have been exploring the things we expected to be interested in doing for the next 10-15 years and have been buying our recreation toys of choice over the last couple of years. Neither of us have very expensive hobbies anyway. As far as I can tell, our average from the last 6 years is a reasonable prediction of what we’ll see in the foreseeable future.


FIRE Calculator 40 year retirement: 96% success
Flexible Retirement Planner: 100% success

Thanks

[travelover]

Welcome. It looks like you have done your homework.

[pb4uski]

I'm somewhat surprised that you don't get 100% success for both websites as your withdrawals will only be $22k a year plus taxes, so I'm guessing probably 1.5% WR at the most and it will go up slightly until SS starts because of the non-COLA pension but then drop again once SS starts.

In any event, I think you're golden. Welcome and have fun.

You may want to do a pretend tax return for your first full year of retirement. If you haven't done this before you may get a nice surprise. You should also probably consider whether annual Roth conversions will be beneficial for you given that so much of your total nestegg is tax-deferred. Also, consider a HSA if mega offers one.

[Golden sunsets]

Hello dog;Welcome. You look to be in fine shape. The folks on this board offer great support/input/advice. Hopefully you will continue to visit this forum and contribute your perspective.

[heeyy_joe]

Well done, now do twenty push-ups.

[DoWright]

$2M and a $56K annual pension, albeit w/o COLA

That's excellent... That annual $56K means you won't have to touch your retail investment accounts... Are any of the stocks dividend payers?

Enjoy your retirement!

[diehard1997]

Enjoy your retirement. The numbers look great.

[Willers]

You are golden. Enjoy!

[WannabeRetired]

Impressive numbers. Gotta love that pension. Congratulations!

[HeloDog]

Thanks for the positive feedback.

My wife and I have been tracking well to our plan over the years and are feeling pretty comfortable with the decision. But it's a very big step! This year I find myself rerunning the numbers to be sure I'm not missing something big before we take that step. i'm not too worried about the little things as long as the basic plan is sound.

So again, it's great to hear the numbers are making sense to this audience of very knowledgable people.

pb4uski: Yep, you're pretty close. On my own spreadsheet I start with a 1.8% withdraw rate that inches it's way up over time. I'll take a look at the Roth conversion and HSA as you suggest. Another parameter I'll have to consider is that about $146K in the 401K is after-tax contributions.

DoWright: I have to admit I didn't pick the stocks with dividends in mind.

[travelover]

Quote:

Originally Posted by HeloDog ..........Another parameter I'll have to consider is that about $146K in the 401K is after-tax contributions. ................

I was able to roll over my 401(k) after tax money directly into a Roth with some coaching from Fidelity and the folks at Fairmark forums (Alan S. in particular).

[Palmtree]

Your figures are solid for a great retirement. (We should all be so lucky :-)) Congrats and enjoy your future. You've earned it!

[freedomatlast]

You look to be in great shape to pull the plug. Your private sector pension beginning at 55 is a great asset to have.

[pb4uski]

Quote:

Originally Posted by HeloDog ...Another parameter I'll have to consider is that about $146K in the 401K is after-tax contributions. ....

Check into rolling those after-tax 401k contributions directly into a Roth IRA. That rollover has no tax implications. I found out about that possibility after I had taken my after-tax 401k money in cash and used it for living expenses, but luckily ot was only about $10k so it wasn't a big deal.

[travelover]

Quote:

Originally Posted by pb4uski Check into rolling those after-tax 401k contributions directly into a Roth IRA. That rollover has no tax implications. I found out about that possibility after I had taken my after-tax 401k money in cash and used it for living expenses, but luckily it was only about $10k so it wasn't a big deal.

Correct. That is why I suggested the Fairmark forum, where it has been discussed extensively.

[HeloDog]

Thanks for the info and pointing me over to Fairmark, Travelover. Hadn't been there before and it looks like another invaluable resource.

[jollystomper]

I don't think you have to worry about SS reduction - it is too much of a political hot potato to change it for those 55 and over. Your retirement savings and SS are a little more than mine, and your pension is a little less than mine, so on balance we are probably even. We plan to start with a larger annual expense amount ($100K). We had our financial planner (paid for by Megacorp) run the numbers and the bottom line was "you can retire today". Firecalc, Fidelity Retirement Income Planner, and Financial Engines all say the same thing. So I think you will be fine.

[heyduke]

the hardest part of early retiring is simple taking that leap of faith... having been ER for a bit over 3 years on much less than you claim I can only tell you it is the best thing we could have done... Enjoy Life!

[eytonxav]

Quote:

Originally Posted by pb4uski I'm somewhat surprised that you don't get 100% success for both websites as your withdrawals will only be $22k a year plus taxes,

+1 looks like a no brainer for OP to have a no sweat retirement, good job!