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Retiring this year - I'm very nervous.
Old 03-03-2017, 02:16 PM   #1
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Retiring this year - I'm very nervous.

Please tell me that we would be fine.

Turning 58 and wife will be 56 (my wife is not working)
Taxable saving: 1.9+M (pretty much all in cash)
IRA/401K: 1.1+M
No pension. No debt. Own home - fully paid.
One kid in college (2nd year) about 25K a year. Figured have to
pay another 50+K in the next 2 years.
One kid in high school - I figured we'll spend 150K on future
college cost. (State Universities, no Ivy league or private school)

Based on past 2 year expenditures.. we spent on average about
75-80K a year. Of course, this will go up since we need to pay
for health insurance, etc.. out of pocket. We are relatively healthy and
have little health expenses (so far). We are pretty thrifty.
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Old 03-03-2017, 02:26 PM   #2
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The thing that jumps out at me is the large all-cash position. Even a low inflation rate is going to take a big bite out of that in time so at least some needs to be in equities.

If you haven't seen this before here is a list of questions to have answers for before you pull the plug.

Some Important Questions to Answer Before Asking - Can I Retire?
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Old 03-03-2017, 02:27 PM   #3
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You look good, but I question that much in cash, especially once inflation kicks in again.
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Old 03-03-2017, 02:28 PM   #4
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What does FIREcalc say?

FIRECalc: A different kind of retirement calculatorthers

+1 with others... way too much cash. Why?

You should be all set though. ($3.3m less $0.2m for college) x 3% WR would be $93k a year to spend and that is ignoring SS, so it will likely be higher. But... the conservative WRs we refer to here are typically based on 30/70 to 70/30 portfolios... but with some repositioning you should be fine.

You'll need to include federal and state income taxes too.
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Old 03-03-2017, 02:31 PM   #5
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If you don't protect that $1.9M in cash from inflation, then you're likely to run into problems in the future as inflation erodes it.

If you shift to a more "standard" conservative portfolio (50/50, 60/40, etc asset allocation), then you should be able to get a 4% withdrawal rate to supply ~$112k/year ($3m - $200k for school leaves $2.8M * 0.04 = $112k). That should more than cover your current expense rate plus health insurance.

What about SS for you and/or your wife? That could make it even more comfortable (or closer to comfortable if you stay in cash, though I'm still not sure I'd want 2/3rds of my portfolio losing buying power to inflation).
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Old 03-03-2017, 03:00 PM   #6
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You mention no pension.

How about Social Security?
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Old 03-03-2017, 03:05 PM   #7
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Quote:
Originally Posted by pb4uski View Post
What does FIREcalc say?

FIRECalc: A different kind of retirement calculatorthers

+1 with others... way too much cash. Why?
I plugged in 90K expenditure and 3M Portfolio - got 100% with
1.67M lowest and 19+M highest.

Regarding the comments about having way too much cash..
The reason is simply the unique way I trade in
this account. The plan is to put them into Div paying equities
and bonds slowly.. Market is so high now, waiting for a pull back

Regarding SS, my last statement indicated that I can get
about 2.9K at 66.. - I guess my wife can collect 1/2 of mine.
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Old 03-03-2017, 03:11 PM   #8
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It's just as possible you'll miss out on another 10% run-up as it is that we'll see a 10% correction. If I were you I'd dollar cost average $150,000 per month into equities and fixed income over the next 12 months.
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Old 03-03-2017, 03:22 PM   #9
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Originally Posted by panacea View Post
It's just as possible you'll miss out on another 10% run-up as it is that we'll see a 10% correction. If I were you I'd dollar cost average $150,000 per month into equities and fixed income over the next 12 months.
Yeah.. it is hard to dollar average when the market
is at crazy high. I am very interested in learning various strategies
to put say a pile of cash into the equities/bonds while avoiding
buying too high. I am looking into selling puts against stuffs
I want to buy.. e.g. PFF at $36 or some ETFs collecting $$ while
waiting.. I guess I am going off topic..

So looks like we will be OK. Thanks. I am feeling better.
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Old 03-03-2017, 03:24 PM   #10
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Quote:
Originally Posted by retiringwiz View Post
I plugged in 90K expenditure and 3M Portfolio - got 100% with
1.67M lowest and 19+M highest.

Regarding the comments about having way too much cash..
The reason is simply the unique way I trade in
this account. The plan is to put them into Div paying equities
and bonds slowly.. Market is so high now, waiting for a pull back

Regarding SS, my last statement indicated that I can get
about 2.9K at 66.. - I guess my wife can collect 1/2 of mine.
I'm pretty sure Firecalc assumes the entire portfolio is invested (no "cash" option in the "your portfolio" section that I'm aware of how to model), so I'm not sure the calculator works in your situation.

Assuming that's monthly SS $, that should provide a reasonable buffer for you.
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Old 03-03-2017, 04:13 PM   #11
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Quote:
Originally Posted by exnavynuke View Post
I'm pretty sure Firecalc assumes the entire portfolio is invested (no "cash" option in the "your portfolio" section that I'm aware of how to model), so I'm not sure the calculator works in your situation.

Assuming that's monthly SS $, that should provide a reasonable buffer for you.
I believe Firecalc allows you to enter different portfolio compositions.

Your numbers look pretty good to me.
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Old 03-03-2017, 05:18 PM   #12
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Quote:
Originally Posted by retiringwiz View Post
I plugged in 90K expenditure and 3M Portfolio - got 100% with
1.67M lowest and 19+M highest.

Regarding the comments about having way too much cash..
The reason is simply the unique way I trade in
this account. The plan is to put them into Div paying equities
and bonds slowly.. Market is so high now, waiting for a pull back

Regarding SS, my last statement indicated that I can get
about 2.9K at 66.. - I guess my wife can collect 1/2 of mine.
How long have you been waiting .....
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Old 03-03-2017, 05:22 PM   #13
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Quote:
Originally Posted by retiringwiz View Post
.....

Regarding SS, my last statement indicated that I can get
about 2.9K at 66.. - I guess my wife can collect 1/2 of mine.
That is NOT an accurate number. If you read your statement carefully it considers you will continue to work until age 66.

To get a really close number, use your statement and go to the ss website (it's on the statement) and they have a calculator.
You plug in the numbers on your statement and then put zero's for the years you won't be working and pick what age you want SS.
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Old 03-03-2017, 05:40 PM   #14
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Don't be nervous- you'll be fine. I understand your reluctance to dollar cost average your cash into equities, but history has shown that equities outperform cash. I would DCA for a few years until you meet the AA that makes sense for you.
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Old 03-03-2017, 07:17 PM   #15
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You might value average in. For example, let's say you decide you want to invest $1.8 million in equities (60% of your current $3 million) and value average in over 3 years. $1,800/38 is $50k a month.

Invest $50k... a month later add whatever is needed to increase the value to $100k... a month after that, add whatever is needed to increase the value to $150k, repeat until you get to 60% equities overall. You'll invest more when prices are relatively low and less when prices are relatively high... buy low of the addage buy low/sell high.

Given a long time frame you will likely need to make some mid-course corrections, but I think you get the idea.
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Old 03-03-2017, 07:18 PM   #16
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Quote:
Originally Posted by Sunset View Post
That is NOT an accurate number. If you read your statement carefully it considers you will continue to work until age 66.

To get a really close number, use your statement and go to the ss website (it's on the statement) and they have a calculator.
You plug in the numbers on your statement and then put zero's for the years you won't be working and pick what age you want SS.
What Sunset says is true but in most cases plugging in those zeros for the remaining years doesn't make a significant difference in your benefit.
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Old 03-03-2017, 07:28 PM   #17
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Quote:
Originally Posted by Sunset View Post
That is NOT an accurate number. If you read your statement carefully it considers you will continue to work until age 66.

To get a really close number, use your statement and go to the ss website (it's on the statement) and they have a calculator.
You plug in the numbers on your statement and then put zero's for the years you won't be working and pick what age you want SS.
Yes I am aware of it. I tried using the calculator on the SS website and
it complained that I don't have access to this service. I guess it has
something to do about me blocking access to my personal info
in the past.. Anyway, I get about 1.9+K per month at 62, I don't
intend to touch SS until 66 or 70.. So I figure it will be about
3K between me and my spouse when we decide to claim SS.
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Old 03-03-2017, 11:18 PM   #18
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Welcome.

Let's play worst case scenario....

I see $200k in future college costs....surely, if things go south, that is one expense you can cut, adjust, (lots of options today) etc., if ABSOLUTELY necessary, right? Wouldn't that free up enough cash to get you through the rough spot? No house payment, and a huge reduction in spending, IF.....

It would sure make me feel better!
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Old 03-03-2017, 11:19 PM   #19
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And, you can always collect early SS, if needed. Looking good!
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Same here..
Old 03-04-2017, 10:31 AM   #20
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Same here..

Wow..this is really close to exactly where we are..

I'm 53..wife 59. Also over-weight in cash for several reasons explained below. Expenses also ~$80K/yr and no mortgage. No kids in expensive schools.

Personally, being over-weight in cash as a % of assets helps me sleep better at night. Aside from the obvious (inflation), it's "guaranteed". And while I'm barely keeping even overall with inflation, at least I know it will be there to pull from if the market craters (which eventually it will - with my luck, right when we're in the early years of retirement). And, there are tactics (eg: I-Bonds) to at least keep pace with inflation, although you're obviously limited to how quickly you can move cash into those types of investments on a yearly basis.

Wife on many occasions wants to liquidate all equities and bond funds and go 100% cash. Her thinking is "at least we won't lose anything". I remind her constantly that you don't "lose" until you sell, and that best I can recall, there hasn't been any 10-year period in history where stocks lost money. Her response (which makes sense) is that "at this point in our lives 10 years is a long time" (agreed).

For us, as we get older, being conservative has it's appeal. There's absolutely no way on earth I'd be moving big sums of $$s into the market at this point - the bull is very old, and almost certain to crater at some point "soon" (all IMHO and just gut feel). It may have another several thousand point run ahead, but is it worth another possible 2008 (or even "lesser disaster" 20+% drop?) this close to ER to potentially get another 10% upside? To us it's not, but everyone obviously needs to do what's right for their own comfort level and financial situation..

Now, OVER TIME (5-10 years+), equities are very likely to go up..but look at your time horizon and need for the $$s every year between now and then also, and consider having to pull from a bucket of money that's decreasing in value instead of increasing. To us, that doesn't sound like a great situation to be in, so if we can pull from cash in down years vs pulling from equities, that appears to be a much safer strategy..
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