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Recently "Retired" Single, age 54, no pension
Old 01-22-2019, 08:18 PM   #1
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Recently "Retired" Single, age 54, no pension

Hi, this is my first post. I’m a recent ‘retiree’ after being an employee over 30 years. I am a little overwhelmed, but optimistic, and so glad to have this new freedom. Looking forward to spending time on an arts and crafts home business, but mostly just relaxing and being able to sleep in and have a leisurely coffee.

Just want to say that I have enjoyed reading your posts here for the past few years - many thanks to you all.

My current situation: Single, age 54, no pension, no retiree health insurance.
$1.7 million invested with 25% stocks, and 75% fixed & cash.
Annual income will be from 1 rental house, interest, dividends and withdrawals from my cash accounts, until I can access Rollover IRA at 59 1/2. Social Security at age 62. House, car, rental house are paid for.

Any advice you may have for me is welcome and much appreciated…Cheers!
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Old 01-22-2019, 08:33 PM   #2
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What is your spend? (And rental situation) if you want advice on finance.
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Old 01-22-2019, 08:48 PM   #3
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Originally Posted by pj.mask View Post
What is your spend? (And rental situation) if you want advice on finance.
My annual personal expenses are estimated at $55,000 (includes COBRA/ACA health insurance, savings towards a new car, vacation fund, and house maintenance fund).

My rental house will net $12,000 annually (after property tax and insurance, but before income tax).
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Old 01-22-2019, 09:13 PM   #4
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With that asset allocation and relative youth, inflation might put you at risk of running out of money.
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Old 01-22-2019, 09:35 PM   #5
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With that asset allocation and relative youth, inflation might put you at risk of running out of money.
Could I increase my stock allocation to 35% and be ok? I don't sleep well at night with a lot in the market...but I do remember the 80's inflation. My mortgage was 18%. I'm hoping I would be able to get higher interest rates in CD's and Treasuries, if inflation rears it's ugly head?
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Old 01-22-2019, 10:19 PM   #6
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Could I increase my stock allocation to 35% and be ok? I don't sleep well at night with a lot in the market...but I do remember the 80's inflation. My mortgage was 18%. I'm hoping I would be able to get higher interest rates in CD's and Treasuries, if inflation rears it's ugly head?
Do you have more information on your income from interest, dividends and how much will your SS be? It would help to see your overall picture. I am 59 and have more like 65% in stocks and I sleep fine and really enjoy my leisurely coffees a lot!
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Old 01-22-2019, 10:25 PM   #7
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FIRECalc scenario 1: updated to a 35% stock portfolio (instead of 25%), with a 75% reduced Social Security income estimate beginning in 2027 (age 62). I excluded my rental house income. It gave a 100% success rate, for a 50 year period (to age 104).

FIRECalc scenario 2: removed the Social Security from FIRECalc, and instead included rental income of $7,000 per year beginning in 2019, the success rate is 99%. The $7,000 rental income is net of tax, insurance, and maintenance fund.
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Old 01-22-2019, 11:01 PM   #8
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Do you have more information on your income from interest, dividends and how much will your SS be? It would help to see your overall picture. I am 59 and have more like 65% in stocks and I sleep fine and really enjoy my leisurely coffees a lot!
Thanks VungTau. SS estimate is approximately $21,000 at 62.

My portfolio has recently changed - I'm estimating $10,000 from taxable accounts.
60% is in an IRA rollover with Fidelity which I can't touch until 59.5.
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Old 01-23-2019, 06:22 AM   #9
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You need about 45,000 from investments(the rental makes up the shortfall) to get you to SS age and then about 25,000 from investments after that. With 1.7 M that is about 2.5% withdrawal now and 1.6% withdrawal after SS. No wonder you are hitting 100% success. You could likely invest in all bonds and make it. I don't suggest that, but I think you know your tolerance, adjusted accordingly, and have a plan that will work. Taxes should be very low in the pre 59 1/2 years and should be controllable after that.
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Old 01-23-2019, 06:30 AM   #10
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Your age in bonds has always been considered a conservative allocation. However, you need to be able to sleep at night. Perhaps consider a target date or other balanced fund containing both equities and bonds so you can ensure diversification. This might help you to kick back, enjoy ER, and not worry about the market. Good you are exploring alternatives in FireCalc.
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Old 01-23-2019, 06:47 AM   #11
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Originally Posted by SunBlueSky View Post
FIRECalc scenario 1: updated to a 35% stock portfolio (instead of 25%), with a 75% reduced Social Security income estimate beginning in 2027 (age 62). I excluded my rental house income. It gave a 100% success rate, for a 50 year period (to age 104).

FIRECalc scenario 2: removed the Social Security from FIRECalc, and instead included rental income of $7,000 per year beginning in 2019, the success rate is 99%. The $7,000 rental income is net of tax, insurance, and maintenance fund.
It sounds like you are good to go. Removing all of social security is way too conservative vs. a discount, as you will not receive zero amount. A 25% stock allocation is on the low side, but there are enough members on this site who have no monies at all in the stock market.

Start your enjoyment.
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Old 01-23-2019, 06:59 AM   #12
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Thanks VungTau. SS estimate is approximately $21,000 at 62.

My portfolio has recently changed - I'm estimating $10,000 from taxable accounts.
60% is in an IRA rollover with Fidelity which I can't touch until 59.5.
With those firecalc results and your conservative allocation it seems you are in great shape! Have you tried running firecalc with a higher allocation to stocks, if so, how did it look?
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Old 01-23-2019, 08:39 AM   #13
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Originally Posted by VanWinkle View Post
You need about 45,000 from investments(the rental makes up the shortfall) to get you to SS age and then about 25,000 from investments after that. With 1.7 M that is about 2.5% withdrawal now and 1.6% withdrawal after SS. No wonder you are hitting 100% success. You could likely invest in all bonds and make it. I don't suggest that, but I think you know your tolerance, adjusted accordingly, and have a plan that will work. Taxes should be very low in the pre 59 1/2 years and should be controllable after that.
Thanks, VanWinkle, for your comments. Muni bonds will be one of the investment scenarios for me to look into for income. My fallback withdrawal plan before 59 1/2 was to just use up my cash savings. This first year, the nitty gritty of seeing my cash balance go down every month instead of up is going to be strange, indeed.
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Old 01-23-2019, 08:51 AM   #14
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Originally Posted by Col. Klink View Post
Your age in bonds has always been considered a conservative allocation. However, you need to be able to sleep at night. Perhaps consider a target date or other balanced fund containing both equities and bonds so you can ensure diversification. This might help you to kick back, enjoy ER, and not worry about the market. Good you are exploring alternatives in FireCalc.
Col. Klink, thanks, and yes I have recently considered a target date/balanced fund which would help me to not check my balances so often...I would surely like to kick back and not worry! The Big ERN site and his safe withdrawal/sequence of returns postings give me pause...
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Old 01-23-2019, 09:18 AM   #15
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It sounds like you are good to go. Removing all of social security is way too conservative vs. a discount, as you will not receive zero amount. A 25% stock allocation is on the low side, but there are enough members on this site who have no monies at all in the stock market.

Start your enjoyment.
Dtail, thanks for your encouragement. I have seen members comment on having a low or no stock market exposure, however, I'm not sure how big the balance needs to be to feel safe. Mine is not big enough to ignore inflation.

This year will be my first year of downsizing my expenses - and to be able to enjoy life on a smaller budget. So far, so good - cooking and coffee at home, very little consumer spending. Being a homebody helps.
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Old 01-23-2019, 09:51 AM   #16
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With those firecalc results and your conservative allocation it seems you are in great shape! Have you tried running firecalc with a higher allocation to stocks, if so, how did it look?
Thanks VungTau. Yes, FIRECalc results with higher stock allocations give me much greater success. If only I could handle the risks/pain of the market.

However, since I have a large cash balance which I will be using in the first six years, I altered the inputs to "as if" my retirement date to be age 60. So, a beginning portfolio balance of $1,520,000 ($1.7M minus $180,000, or $30k/year for 6 years). Here are the FIRECalc results, with 25% stock allocation, plus $16k 75% reduced SocSec at 62:

Because you indicated a future retirement date (2025), the withdrawals won't start until that year. The tested period is 6 years of preretirement plus 44 years of retirement, or 50 years.

FIRECalc looked at the 98 possible 50 year periods in the available data, starting with a portfolio of $1,520,000 and spending your specified amounts each year thereafter.

Here is how your portfolio would have fared in each of the 98 cycles. The lowest and highest portfolio balance at the end of your retirement was $482,559 to $7,808,530, with an average at the end of $3,091,356. (Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)

For our purposes, failure means the portfolio was depleted before the end of the 50 years. FIRECalc found that 0 cycles failed, for a success rate of 100.0%.
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Old 01-23-2019, 01:43 PM   #17
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with your young age, no pension and SS income later I would look at converting some of your IRA to Roth IRA each year at a low tax bracket yet keeping it low enough for ACA subsidy.
Tax free growth and no mandatory withdraw at age 70 on Roth. DW and I retired at 54 and 51 and been converting some each year.
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Old 01-23-2019, 02:09 PM   #18
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with your young age, no pension and SS income later I would look at converting some of your IRA to Roth IRA each year at a low tax bracket yet keeping it low enough for ACA subsidy.
Tax free growth and no mandatory withdraw at age 70 on Roth. DW and I retired at 54 and 51 and been converting some each year.
Trawler, thanks for your suggestion on converting to Roth IRA. This is definitely on my to do list. I am not up to speed on all the tax strategies but am trying to learn. The ACA subsidy is another item I have to learn about.
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