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Retire 2013 or 2014-- Sanity vs Money?
Old 03-02-2013, 03:41 AM   #1
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Retire 2013 or 2014-- Sanity vs Money?

The question is....
is 3.5%, or about $6000 a year, enough to retire a year early?

I know, you will ask, what does it mean to you. Valid question. I am just asking opinions.

Here is the situation. Currently I make about 143,000 a year, local safety government job.

Its been a tough 30 years. I am ready to go.

I can go now at about 120,000 pension, roughly 85 %. Or, I can do another year and get an 88.5% pension, roughly 126,000. $6000 between the two, but it lasts for the rest of my life (I'm almost 53).
2 % cola every year.

Married. Wife makes about 200,000 a year. She will retire in 2016 and won't collect a pension until 2021, then 6000 a month. SS will increase it by 2000 in 2028. She probably will work other jobs between 2016 and 2021- at a healthy rate of pay.

The house is worth 1 million. 200,000 left on a loan with a rate of 2.8%.

Mutual funds= $855,000
Ira= 20,000
401k= 350,000

We live in an area of the country that is very expensive. We dont have extavagant tastes, but the outflow is steady.

Other than the house mortgage, there is one major expense...
a 11 year old child.
We are also saving for college (529). We expect HEAVY college tuition.

Not only that, we want our child to see the world. Expensive traveling.

That's my story.
It seems like I have enough to get by. Or do, I?

What would you recommend?
Get out in 2013 with my sanity intact?
Or get out in 2014 with a few more bucks?
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Old 03-02-2013, 06:09 AM   #2
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What is your annual expenditure exactly ? Assuming it is reasonable, I would go.
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Old 03-02-2013, 06:46 AM   #3
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You aren't giving enough information about your expected expenses for us to offer informed advice. Most people would be envious of your already very generous pension, but it could easily be totally inadequate to support the lifestyle you've come to expect. The one thing that makes me suspicious that this would, indeed, be the case is the fact that your net worth, even including home equity, is not quite six times your annual household income of $343,000. I would characterize this as indicative of a family that prefers to spend rather than save.

So before just jumping into retirement, you really need to sit down with your wife and have a serious conversation about the kind of life you expect to live post retirement, and how much it will cost to live it. It's possible you'll discover that you don't have enough income, and furthermore that working an extra year won't make much of a difference. Then what? You don't sound like a good candidate to delay retirement indefinitely, so you would have to make some hard choices. Are you willing to move to a less expensive part of the country? Be less of a world traveler? Pay only part of your child's college tuition? It's better to have these conversations now, while you still have a high income and good savings, rather than a few years into retirement when you perhaps have been overspending your budget and are watching your savings slowly dwindle.
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Old 03-02-2013, 06:51 AM   #4
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They way you phrase the question you answer it. If your sanity isn't intact what good is the extra $6K. I live in a high cost area and benefited from two large incomes for years like you. It is easy to burn through a shockingly large income stream and still not feel like you are living large. But the reality is that anyone can live very well on $120K/year (let alone $192K in 2016) if they work on it. Might require some changes but it can easily be done. So you have plenty of savings now to cover college and will have plenty of income. Figure out what you need to do to make things work.
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Old 03-02-2013, 10:19 AM   #5
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Reminds me of a quote from a movie, "You're so money, you don't even know you're money!" Name the movie.

Anyway, yes, you have more than enough to live very well in retirement and put your child through even the most expensive private college. If you really believe your sanity is at risk, pull chokes now!

BTW, what do all the calculators tell you? FIRECalc, ORP, ESPlanner, etc.
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Old 03-02-2013, 06:23 PM   #6
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Originally Posted by NanoSour View Post
Reminds me of a quote from a movie, "You're so money, you don't even know you're money!" Name the movie.

.
Swingers. The movie that launched Vince Vaughan and Jon Favreau.
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Old 03-03-2013, 04:55 AM   #7
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Swingers. The movie that launched Vince Vaughan and Jon Favreau.
Sure did....crazy that they actually met in the football movie, Rudy!
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Old 03-03-2013, 08:03 AM   #8
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Swingers. The movie that launched Vince Vaughan and Jon Favreau.
You sir are correct!
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Old 03-03-2013, 08:10 AM   #9
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Without knowing your projected retirement expenses, no one can give a meaningful answer. Try http://www.firecalc.com/.

I'm probably making too much of the choice of words, but if your "sanity" was truly hanging in the balance, you wouldn't be asking...
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Old 03-03-2013, 08:10 AM   #10
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Assuming 7% return, your approx $1.25 million in retirement savings will grow another $87,500 in one year. At 4% withdrawal rate, thats another $3500 per year in income to add to your extra $6000. Just one more thing to consider. Having said that, I would be gone yesterday.
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Old 03-03-2013, 08:16 AM   #11
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Quote:
Originally Posted by Senin View Post
The question is....
is 3.5%, or about $6000 a year, enough to retire a year early?

I know, you will ask, what does it mean to you. Valid question. I am just asking opinions.

Here is the situation. Currently I make about 143,000 a year, local safety government job.

Its been a tough 30 years. I am ready to go.

I can go now at about 120,000 pension, roughly 85 %. Or, I can do another year and get an 88.5% pension, roughly 126,000. $6000 between the two, but it lasts for the rest of my life (I'm almost 53).
2 % cola every year.

Married. Wife makes about 200,000 a year. She will retire in 2016 and won't collect a pension until 2021, then 6000 a month. SS will increase it by 2000 in 2028. She probably will work other jobs between 2016 and 2021- at a healthy rate of pay.

The house is worth 1 million. 200,000 left on a loan with a rate of 2.8%.

Mutual funds= $855,000
Ira= 20,000
401k= 350,000

We live in an area of the country that is very expensive. We dont have extavagant tastes, but the outflow is steady.

Other than the house mortgage, there is one major expense...
a 11 year old child.
We are also saving for college (529). We expect HEAVY college tuition.

Not only that, we want our child to see the world. Expensive traveling.

That's my story.
It seems like I have enough to get by. Or do, I?

What would you recommend?
Get out in 2013 with my sanity intact?
Or get out in 2014 with a few more bucks?
Senin-

My first reaction was envy of your pensions; my second was, this is why my taxes were so damn high when I lived in CA; my third, was Vallejo, CA, the city that went bankrupt because they couldn't afford to pay all their pensions and other expenses.

With your numbers, almost everyone here is going to tell you to retire. Before you do, I'd suggest you examine spending per Karluk's post above. I also strongly suggest you investigate the reliability of your pensions, and whether they're sustainable.
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Old 03-03-2013, 08:18 AM   #12
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Originally Posted by utrecht View Post
Assuming 7% return, your approx $1.25 million in retirement savings will grow another $87,500 in one year. At 4% withdrawal rate, thats another $3500 per year in income to add to your extra $6000. Just one more thing to consider. Having said that, I would be gone yesterday.
At age 53, 4% WR is a little aggressive (about 85% success vs the 95% the 4% SWR model is based on). 4% is not applicable for all ages, it's used a little too often/casually here.

That said, the OP will be drawing considerable pension income (COLAd?), so % success may be less of a concern. The OP may have floor income covered with pension alone.
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Target AA: 60% equity funds / 35% bond funds / 5% cash
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Old 03-03-2013, 12:13 PM   #13
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IMO, when you have a very healthy sized pension, 4% is probably pretty safe. The 4% coming from investments is a much smaller percentage of total income than a different person's 4% who has no pension. The person with the pension is going to be able to cut back to 3% or so, if things go to hell, with a much smaller hit to total income.
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Old 03-03-2013, 12:26 PM   #14
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The one thing I have heard over and over on this forum is Live Below Your Means. Whatever your means are. And you will be fine. IMHO, With your means, you should stop working tomorrow.
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Old 03-04-2013, 03:13 AM   #15
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Expenses-- in the area of $6000 a month, including the mortgage and property tax.

Perhaps I should clarify, and some of you are correct, I exagerated when I said "sanity." I could easily keep my sanity for another year. I think I would just prefer to retire a year earlier.

And, once we get beyond the price burdons of an expensive college and expensive travel, I don't really see us draining the bank accounts. With the pension income (with cola), I don't see us taking 4% out a year. I don't see us touching the accounts at all (and of course, except for college, which I am projecting about over 300,000). Perhaps even adding to the accounts, at least at first. Maybe drawing out in the later years.
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Old 03-04-2013, 10:34 AM   #16
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The very best thing you could do this fine monday morning is put in your retirement paperwork.
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Old 03-04-2013, 10:44 AM   #17
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Quote:
Originally Posted by Senin View Post
Here is the situation. Currently I make about 143,000 a year, local safety government job.

I can go now at about 120,000 pension, roughly 85 %. Or, I can do another year and get an 88.5% pension, roughly 126,000. $6000 between the two, but it lasts for the rest of my life (I'm almost 53).
2 % cola every year.

Married. Wife makes about 200,000 a year. She will retire in 2016 and won't collect a pension until 2021, then 6000 a month. SS will increase it by 2000 in 2028. She probably will work other jobs between 2016 and 2021- at a healthy rate of pay.

The house is worth 1 million. 200,000 left on a loan with a rate of 2.8%.

Mutual funds= $855,000
Ira= 20,000
401k= 350,000

We live in an area of the country that is very expensive. We dont have extavagant tastes, but the outflow is steady.

Other than the house mortgage, there is one major expense...
a 11 year old child.
We are also saving for college (529). We expect HEAVY college tuition.

Not only that, we want our child to see the world. Expensive traveling.
I retired at 55 and after 30 yrs in the San Francisco Bay Area. I am doing just fine on a smaller pension while living in a high cost area. I have to agree that your assets are pretty small considering your income. Either you are spending like crazy or started saving late. But I don't have to contend with child expenses.

My usual advice is to tell people to start LBYM now so that you can have a seamless transition when you retire. It looks to me that you have plenty of income to save up for your child's education.
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