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Old 01-21-2013, 07:54 AM   #1
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FIREd Oct 2012 at Age 49

Hello. I joined this ER community a while ago and have been reading many of the posts. Thought it would be good to toss in my Hi, I am post. The discussion threads here are very interesting, and Im looking forward to learning from this group.

Background:
Married 16 years. DW is 52. Both of us have enjoyed MegaCorp careers. We have one son, age 15. We now live in CT. Annual household expenses $175 200K, excluding income taxes. Non-COLA DB pensions will start at age 60 for each of us: DW $7K per month, mine $18K per month. Until then, expect expenses will be covered by portfolio withdrawals of <3% (inclusive of income taxes), primarily from deferred compensation payouts.

Portfolio allocation (60% tax-advantaged, 40% taxable accounts):
Cash 6%
US Stocks 75%
Foreign Stocks 6%
Bonds 9%
Other 4% (alternative investments)

Factoring in PV of future pension income bumps bond allocation to >30%. Five years left on remaining mortgage balance of $137K. No other debts.

Concerns include:
1) future rate of inflation / healthcare costs
2) future taxes on income / wealth
3) ability / willingness of MegaCorp to make good on its pension obligations

Any comments or feedback would be welcomed.
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Old 01-21-2013, 08:08 AM   #2
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Now I feel poor.
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Old 01-21-2013, 10:51 AM   #3
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Since I paid less for my house than your remaining mortgage balance I doubt any comment I have would be usefull.
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Old 01-21-2013, 10:53 AM   #4
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Welcome aboard, 523HRR!

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Old 01-21-2013, 11:03 AM   #5
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Welcome to the board.

Sounds to me like you are well set. If you have a big enough nest egg to cover your expenses (including taxes) for the next 8-11 years with a portfolio withdrawal rate of less than 3%, you don't even need to worry about your pensions. Especially since part of your expenses are the remaining payments on your mortgage.

I think it inevitable that tax rates will go up for everyone, but you seem to have plenty of cushion to cover any realistic increase. I doubt we will ever see a wealth tax, as it is too easy to evade/too hard to enforce.

At some point, the rate of inflation will increase. But I'm sure you can position your investments to help you keep up.
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Old 01-21-2013, 03:05 PM   #6
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Welcome and congratulations on your success ! Enjoy your well earned retirement I think you're pretty much set for whatever the economy throws at you. Well done !
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Old 01-21-2013, 03:14 PM   #7
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Quote:
Originally Posted by 523HRR View Post
FIREd Oct 2012 at Age 49

Concerns include:
1) future rate of inflation / healthcare costs


You needn't be concerned about either. Just be concerned about your health. Now, go out there and enjoy that FIRE! Cheers!
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Old 01-22-2013, 01:32 PM   #8
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So in 10 years (average) you'll be getting combined pensions of $300k.
Your expenses are $175-200k.
And your nest egg will only be tapped at <3% in the meantime.
Color me envious. (I know, we shouldn't envy.... but I'd *love* to have that scenario!).

As long as the pensions are solvent... you're good to go.
Since those pensions are unusually large - you might want to double check the solvency and what the policy of the PBGC is for "guarantees... it's a lot lower value per month.
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Old 01-22-2013, 01:49 PM   #9
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Now I feel poor.
Same here. Their monthly pensions are more than my annual expenses!

And like Lazarus, my mortgage (paid off in 1998) was far less than your remaining balance.

Can't say I'd have anything constructive to add but as a fellow 49-year-old early retiree, I congratulate you on that special thing we have in common.
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Old 01-22-2013, 02:05 PM   #10
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You may want to consider taking a lump sum since you already accumulated a large portfolio and don't necessary need lifetime income. Even if you want lifetime income, you may want to consider lump sum to diversify the risk from one provider to multiple providers.

By the way, can I have some money?
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Old 01-22-2013, 06:22 PM   #11
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Quote:
Originally Posted by 523HRR View Post
FIREd Oct 2012 at Age 49<>Both of us have enjoyed MegaCorp careers.
Non-COLA DB pensions will start at age 60 for each of us: DW $7K per month, mine $18K per month.
Now it's clear why you enjoyed your career.

Ha
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Old 01-22-2013, 06:25 PM   #12
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Welcome.
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Old 01-22-2013, 08:08 PM   #13
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Non-COLA DB pensions will start at age 60 for each of us: DW $7K per month, mine $18K per month.
I wonder what kind of employment gives you pensions worth a combined $300,000 per year -- even it it does not have a COLA.

Are you at liberty to tell us?

And where are you located?
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Old 01-22-2013, 08:19 PM   #14
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partner at a big 4 firm?
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Old 01-23-2013, 10:09 AM   #15
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Thanks for the comments. My wife and I were both with a big global company and lived overseas for several years...now in Connecticut. Pensions are special executive plans which have accumulated due to long years of service...along with our deferred compensation, would not be protected in the event of bankruptcy. While the firm is rated AA/Aa, taking the pension as a lump sum is a useful consideration as suggested by hlfo718...when we get to that point.
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Old 01-23-2013, 10:56 AM   #16
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Will you adopt DH & I? We've already been thru college and orthodonture

And welcome from a fellow newbie
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Old 01-23-2013, 11:14 AM   #17
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Welcome from another that got free at 49! You are going to love the freedom and lack of pressure
You are in a good place concerning income. I also have 2 pensions coming down the road at 60 - 65 depending on when I start drawing. Your income far exceeds mine and I am very comfortable.....so - no excuses.....enjoy!

I would be interested in what type of career you have to earn that level of pension....I was with mega pharma.
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Old 01-23-2013, 11:54 AM   #18
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Will you adopt DH & I? We've already been thru college and orthodonture
Ha - thanks for the offer, but we've already got a teenager we're working to get off the payroll!
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