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Retire at 60
Old 10-15-2018, 03:14 PM   #1
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Retire at 60

Hi everyone. Been lurking here for a while and find all the discussions very helpful. I would like to seek some advice (and maybe reassurance) on what I hope to do. Thanks in advance.

60 right around the corner. Hope to retire next year and travel abroad on a full time basis, living 3 months here and 4 months there.

Assets: 1 million in taxable account, 1.5 million in IRA and 100,000 in Roth IRA, all invested in individual stocks. Collect over 60,000 in dividends a year. Dividends have been growing at 5 to 10% per year. Dividends seem safe since most of the investments are in big cap stocks like Microsoft, Intel, Cisco System, Merck, etc.

Will receive a pension at 60 for about 1400 a month after tax. The pension also provides health insurance. Intend to continue with part-time work online, earning about 2500 a month after tax. Would like to have 8000 a month after tax cash flow to live on and travel with, so intend to draw down about 5000 a month from dividends. Don't intend to collect social security till 67 when the estimated amount is about $2600 a month.

Have no dependents. Have a mortgage which the equity in the house can cover. Can sell the house, or in the worst case scenario go on paying the mortgage, about $1500 a month, while living abroad.

Should I feel financially safe in pulling the plug on my full-time job next year? Again, thank you for any input you can provide.
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Old 10-15-2018, 03:23 PM   #2
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Welcome averagebum to our wonderful site.
It sounds like your 60k withdrawals would be ~3%WR not including SS.
I would say you seem good to go.
Have you tried using the retirement calculator associated with this site called Firecalc?
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Old 10-15-2018, 03:30 PM   #3
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Welcome! Have you created a budget for your international travel? I'm assuming that your pension's health insurance is US domestic only, and won't cover you overseas. As long as your stated income will meet your monthly needs, with some contingencies built in...
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Old 10-15-2018, 03:46 PM   #4
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Should I feel financially safe in pulling the plug on my full-time job next year? Again, thank you for any input you can provide.
It depends on how much income you expect while retired, but I would not have a problem pulling the plug with what you described.

A couple questions: Is the pension COLA? Does the included health insurance convert to secondary insurance (to Medicare) when you turn 65? My wife has a similar arrangement and her insurance is now our secondary to Medicare. It is more expensive than Part G/Part D but the coverage is really good and has paid off for us. You will find that healthcare can be one of your biggest retirement expenses so having that covered is huge.
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Old 10-15-2018, 03:54 PM   #5
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Have a great time. We are only able to travel internationally once or twice a year.

Just beware of the Schengen Agreement limiting you to staying 90 days in the EU out of any 180 day period. But there is a whole world out there outside of Europe.
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Old 10-15-2018, 04:18 PM   #6
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SS gap = $2,600/month * 7 years = $218,400

Ultimate gap = $8,000 spend - $1,400 pension - $2,600 SS = $4,000/month or $48,000/year.

WR = $48,000/yr divided by ($2,600,000- $218,400) ~ 2%

You are golden... no need for part-time work unless you want to.

If you have lurked herea while then you know we are going to ask.... what does FIRECalc say?
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Old 10-15-2018, 08:25 PM   #7
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Thank you for the input everyone. I just did the calculation on Firecalc. The worst case scenario, assuming I will be withdrawing 80,000 a year is that I will still end up with about $1.2 million by the end of 30 years. This definitely gives me more confidence.

About health insurance, I have been told that monthly cost of private health insurance costs only about $300 in Germany. I suspect it would probably be cheaper elsewhere in Europe. The insurance that comes with my pension will become my supplement after Medicare kicks in at 65. So I think I should be OK with health insurance.

Thank you all again.
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Old 10-16-2018, 06:52 AM   #8
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I think you mean $80k a year of spending, not withdrawals.... withdrawals will be lower due to pension at ER/age 60 and SS at age 67.... right?

So when are you putting in your resignation?
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Old 10-16-2018, 07:57 AM   #9
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Did you say you are invested 100% in individual equities? My concern would be that you have too much risk, at 100%. What will your feelings be if the market tanks like it did in 2008.
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Old 10-16-2018, 10:28 AM   #10
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On FIREcalc, I put in 80,000 a year withdrawal rate, but you are right, I won't need to withdraw that much counting social security after 67, my pension and part-time work.
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Old 10-16-2018, 10:31 AM   #11
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I have been on dividend reinvestment which has worked out really well for me over the years through up and down markets. If I pull the trigger next year, I will probably do a little selling of the non-dividend paying stocks and raise some cash as a cushion and take partial withdrawal only from the dividends.
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Old 10-16-2018, 10:32 AM   #12
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On FIREcalc, I put in 80,000 a year withdrawal rate, but you are right, I won't need to withdraw that much counting social security after 67, my pension and part-time work.
If you input your SS, pension, and PT income into FIRECalc it reduced your withdrawal rate as those other sources of income came on line.
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Old 10-16-2018, 10:51 AM   #13
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Without even doing the math... based on my own experience you have tons of money and shouldn’t have to worry. Just don’t go nuts and buy an airplane or stay at $1000/night hotel suites! 100% in equities... might want to make sure you’re diversified. I have very little in bonds right now because rates are still low and rising. I’m mostly in dividend stocks.
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Old 10-16-2018, 10:58 AM   #14
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On FIREcalc, I put in 80,000 a year withdrawal rate, but you are right, I won't need to withdraw that much counting social security after 67, my pension and part-time work.
Quote:
Originally Posted by REWahoo View Post
If you input your SS, pension, and PT income into FIRECalc it reduced your withdrawal rate as those other sources of income came on line.
OP, you are confusing spending with withdrawals.

If you spend $80,000 and have a $16,800 pension then your withdrawal would only be $63,200.

The FIRECalc input is what you spend, not what you withdraw... FIRECalc computes annual withdrawals based on what you input for spending, pensions and SS.
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Old 10-16-2018, 10:26 PM   #15
Confused about dryer sheets
 
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Thank you for your input and encouragement everyone. I have to figure out how to input the variables into the equation besides the withdrawal amount to do another calculation.
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Old 10-16-2018, 10:38 PM   #16
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Without even doing the math... based on my own experience you have tons of money and shouldn’t have to worry. Just don’t go nuts and buy an airplane or stay at $1000/night hotel suites! 100% in equities... might want to make sure you’re diversified. I have very little in bonds right now because rates are still low and rising. I’m mostly in dividend stocks.
Thank you for the cautionary advice:-), but I am very low maintenance. I drive cheap cars, wear Target and Sears clothes, live in a modest neighborhood. My biggest annual expenditure over the years has been about $15,000 to $20,000 spent traveling abroad two or three times a year. I am addicted to traveling and would love to do it full-time, and would like to do it while still "young" and physically able.

I have about $1 million tied up in a single stock, Cisco Systems, with cost basis of about $20. The rest is fairly well diversified in dividend paying stocks, with a few non-dividend paying ones, about 15% of the portfolio. I think Cisco is on the cusp of something transformative and big--knock on wood.
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Old 10-17-2018, 03:53 AM   #17
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Thank you for the cautionary advice:-), but I am very low maintenance. I drive cheap cars, wear Target and Sears clothes, live in a modest neighborhood. My biggest annual expenditure over the years has been about $15,000 to $20,000 spent traveling abroad two or three times a year. I am addicted to traveling and would love to do it full-time, and would like to do it while still "young" and physically able.



I have about $1 million tied up in a single stock, Cisco Systems, with cost basis of about $20. The rest is fairly well diversified in dividend paying stocks, with a few non-dividend paying ones, about 15% of the portfolio. I think Cisco is on the cusp of something transformative and big--knock on wood.

You are violating two tenets that most forum members hold dear: 1) holding 100% equities in retirement and 2) an extreme concentration of risk with your Cisco holding. I'd suggest you do some reading on these two issues.


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Old 10-17-2018, 04:23 AM   #18
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Should I feel financially safe in pulling the plug on my full-time job next year?
Welcome averagebum!

You should feel financially safe given your numbers as long as you keep spending in check. But I would convert the individual stocks into an index fund to minimize risk.
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Old 10-17-2018, 06:59 AM   #19
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You are violating two tenets that most forum members hold dear: 1) holding 100% equities in retirement and 2) an extreme concentration of risk with your Cisco holding. I'd suggest you do some reading on these two issues.


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I have to re-emphasize this point. Don't let the fact that you've been lucky so far make you think that any one stock is safe. Enron seemed too big to fail until they weren't. Washington Mutual was half again as big as Cisco is now when they went under. The only hedge against things like that is diversification.

And, as I tell my partner, if the entire economy collapses we'll have more to worry about than our retirement investments! But it doesn't seem worth losing out on gains by holding gold or massive amounts of supplies on that very extreme chance. However, the chance of any one company failing is much less remote.
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Old 10-17-2018, 07:53 AM   #20
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+1 Lack of diversification would be a huge concern for me... I'd be buying out of the money puts to protect myself.
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