Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Review/Validation Please
Old 03-23-2013, 12:08 PM   #1
Recycles dryer sheets
 
Join Date: Nov 2010
Location: Little Trailer Down By The River
Posts: 172
Review/Validation Please

Hi,

I hope the following is clear and complete without being too long.

I am 65, DW is 59. Both sort of professionals (engineer, programmer). Joint income after taxes, employee insurance costs, 401/403 max contribution, extra pension contribution $116k. I am with a mega-corp, work at home, can work anywhere on earth so long as solid internet connectivity. I neither like or dislike my job. They send money, I send work. It is boring but they do send money. While I have a lot of interests, do not feel constrained. DW commutes, hates the job, her employer and worse for her is bored out of her mind. The idea is for DW to quit at the beginning of 2014 and I go a year later.

We max out the IRA/Roth IRA contribution ($6k each) and save an additional $24k out of the take home.

We have no debt other than mortgage. We refinanced a few years ago 3.1% on 30 years. The idea was to get the required number down to less than rent so that if the whole house of cards we call an economy collapsed we could at least find enough so that we would have shelter. We make a large monthly payment against principal such that assuming things go as planned we will be paid off in seven years. We have approximately $250k equity on a $450k house in a very affluent area. Yes we have the smallest and least valuable home in the neighborhood. Sort of the poor white trash among the investment bankers and lawyers.

Total spending runs $80k. We don't spend on things and don't have a lot of things compared to most. We drive a little car, we wear ordinary clothes, We do spend on experiences, dining out, good scotch, better cigars, hobby interests. We are very careful to not "require" a lot of money but do spend "freely" out of what is left after saving, mortgage and so forth. Required spending runs under $60k. I want to be clear we do not require the extra spending, our feeling is that if we can afford it we do it, if it disappears tomorrow, then we stop.

We have two children who are 26 and 27. Both graduated debt free and are properly launched as contributing members of society. DD is finishing grad school, married and a homeowner, SIL is PhD Chemist employed by huge International Mega-Corp with serious prospects and an amazing salary. DD's profession is well paying, high demand. DS is a 1st LT, Ranger assigned to the 82nd. Both graduated Summa, Phi Beta Kappa from among the highest ranked colleges in the world. Neither is unlikely to boomerang.

I have our expenses for the last ten years in quicken. I have a solid, data driven budget for us in retirement. Annual requirements slide around as we go forward as near term the budget reflects mortgage, estimate for DW's health insurance, and high taxes to cover so much withdrawal from tax advantaged accounts. Then over the years the mortgage drops out, DW is on medicare and the requirements drop, SS kicks in at age 70 for us both, etc. I have modeled the RMD's and the taxes there on (to the degree one can, I just put in a big fudge factor). Spending starts at $120k in 2014 (lots of contingency) and drops in constant dollars to $62k by 2025.

I have run FireCalc, i-orp, RIP (Fidelity), and every other calculator I can find and all are 100% and then some. I have run monte carlo analysis, applied a wild SD to the mean inflation, and ran one scenario of 1983 inflation for 40 years (ok I am crazy). They all work.

I also built an elaborate spreadsheet where I listed expenses, calculated taxes, put in a 25% contingency. Rather than estimate inflation, I held all costs constant and solved for the minimum investment return required to have money left on a 40 year plan. The minimum required was .5%. In other words, so long as investment returns exceed inflation by .5%, we have sufficient to run for 40 years starting in 2014. I understand that this is simplistic as it does not take variation into account. I also modeled one of us dying and removing some income from the mix at various ages. I modeled taking $50k additional a year out for the first four years and it all still works.

Assets listed below. My problem is that I am cynical and paranoid. I am scared that someone or some thing will break the model and at age 75 with no prospect of earning any money at all, my DW and I will be on the street. I do not expect the members of this community to repair my psyche, but some review and flaw finding would be much appreciated.

Our overall AA (tax advantaged funds) is approximately 35% domestic/60% bonds and the rest international. Everything is Vanguard funds, except where noted.

Taxed
tax advantaged intermediate term bond fund $100k
Baron Funds $62k (had it for 20 plus years a reminder of my financial education)
MM $50k

Tax advantaged other than Roth (DW and my 401/403, tIRA's)
Intermediate term Admiral Bond funds $1.2MM
Index 500 and total market funds $700k
Total non-US equity funds $200k

Roth
$150k in Index 500 and International funds. The plan is to never touch this except as a last ditch requirement.

SSN (based on entering our earnings record manually in the SS calculator)

Me $38k, DW $35k (this based on DW quitting in 2014)

Non=Cola Pension $12k
__________________

__________________
"Here's to them who would read,
Here's to them that would write.
There's none ever feared that the Truth would be heard,
But those whom the Truth would indict."

Robert Burns
poorcarver is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 03-23-2013, 12:11 PM   #2
Thinks s/he gets paid by the post
obgyn65's Avatar
 
Join Date: Sep 2010
Location: midwestern city
Posts: 4,061
If FIREcalc says you are all set, then you are all set IMO. Time to enjoy life. Welcome to the forum.
__________________

__________________
Very conservative with investments. Not ER'd yet, 48 years old. Please do not take anything I write or imply as legal, financial or medical advice directed to you. Contact your own financial advisor, healthcare provider, or attorney for financial, medical and legal advice.
obgyn65 is offline   Reply With Quote
Old 03-23-2013, 12:20 PM   #3
Thinks s/he gets paid by the post
 
Join Date: Jul 2005
Posts: 3,862
Looks adequate at a glance. Health insurance and surviving spouse planned for. I think all you really need is a comfort level with your flexibility to adjust spending as needed to future portfolio twists and turns.
__________________
Animorph is offline   Reply With Quote
Old 03-23-2013, 12:23 PM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
braumeister's Avatar
 
Join Date: Feb 2010
Location: Northern Kentucky
Posts: 8,601
Quote:
Originally Posted by poorcarver View Post
My problem is that I am cynical and paranoid. I am scared that someone or some thing will break the model and at age 75 with no prospect of earning any money at all, my DW and I will be on the street. I do not expect the members of this community to repair my psyche, but some review and flaw finding would be much appreciated.
It might help if you tried filling in the "someone or some thing" blank with one or two concrete examples of what you might realistically expect to "break the model".

Then you could estimate the likelihood of those things happening. Your modeling has most likely already taken them into consideration, so this little exercise might help you sleep a bit easier. Just a thought.
__________________
braumeister is offline   Reply With Quote
Old 03-23-2013, 12:32 PM   #5
Full time employment: Posting here.
 
Join Date: Jan 2008
Posts: 609
Congratulations Poorcarver. After a review of your plan, you and the DW are more than ready to reap the rewards of discipline and success in raising a family. I would only suggest having the DW leave the mass of employed ASAP. Neither of you need to continue with the grind.

Good Luck.
__________________
NanoSour is offline   Reply With Quote
Old 03-23-2013, 01:04 PM   #6
Full time employment: Posting here.
 
Join Date: Jun 2006
Posts: 926
You both could take the weekend off and retire monday morning with a worst case plan of spending all of your assets between now and age 70 and living off SS after that. It is never correct to say that someone has absolutely nothing to worry about financially but you are pretty darned close.
__________________
CW4, USA-(ret)
RN, BSN-(ret)
jclarksnakes is offline   Reply With Quote
Old 03-23-2013, 01:39 PM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 16,427
Have you ever hear of the term "analysis paralysis"? It sounds to me like you could put all your money into FDIC insured online savings accounts and would still be fine.

Other than asteroids, you should be fine.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
pb4uski is offline   Reply With Quote
Old 03-23-2013, 01:47 PM   #8
Thinks s/he gets paid by the post
heeyy_joe's Avatar
 
Join Date: Nov 2012
Location: Madeira Beach Fl
Posts: 1,403
Aw come'on, be a hero and tell DW to quit her job now. (And your children doing well is quite the blessing).
__________________
_______________________________________________
"A man is a success if he gets up in the morning and goes to bed at night and in between does what he wants to do" --Bob Dylan.
heeyy_joe is offline   Reply With Quote
Old 03-23-2013, 05:14 PM   #9
Thinks s/he gets paid by the post
Live And Learn's Avatar
 
Join Date: Feb 2012
Location: Tampa Bay Area
Posts: 1,689
You have a very serious case of "One More Year" syndrome ! I understand the fears - I am training myself to get over it ! Many people (my mother included) are able to make it on SSI alone. Granted they may not be drinking fine wine and smoking fine cigars, but I'm ready to live a very simple life to have my freedom. There are plenty of low cost / no cost activities that I enjoy that will keep me plenty busy once I retire that I'm not worried about being bored even on a very limited budget.

I'd say go for it - your numbers look great and I think it would take a very large derailment to throw you off track, and I'd venture to guess that those derailments would have you saying "I wish I had retired earlier".

Does anyone have the time > money pic to post here ? I think our new friends needs to see it !
__________________
"For the time being no discipline brings joy, but seems grievous and painful; but afterwards it yields a peaceable fruit of righteousness to those who have been trained by it." ~
Hebrews 12:11

ER'd in June 2015 at age 52. Initial WR 3%. 50/40/10 (Equity/Bond/Short Term) AA.
Live And Learn is offline   Reply With Quote
Old 03-24-2013, 12:12 AM   #10
Recycles dryer sheets
 
Join Date: Jan 2010
Posts: 183
If one of your health starts to fail in a few years, you are likely to regret not being able to do the fun things while you could.With SS and Pension alone, you have more than adequate to live a good life.
And in the absolute disastrous case (govt stops all SS payments, your pension fund goes bankrupt and market/inflation erode your assets and purchasing power), if you raised your kids well, they will not let you be on the streets.
Have you set aside enough in your budget for a therapist
__________________
pixelville is offline   Reply With Quote
Old 03-24-2013, 12:48 AM   #11
Recycles dryer sheets
 
Join Date: Jul 2008
Location: Sacramento area
Posts: 444
"Poor White Trash" is inappropriate language.
__________________
AWeinel is offline   Reply With Quote
Old 03-24-2013, 03:51 AM   #12
Recycles dryer sheets
RISP's Avatar
 
Join Date: Jul 2012
Posts: 307
Welcome to the forum, you did a great job. Now get your priorities straight and act accordingly. If you really want to retire, do it. If you are really too afraid, you may want to consider at least having DW retire - I understood she hates her work more than you dislike yours.

My dad is 63, he retired with little money three years ago. The doctors found a possibly serious health problem during his regular check-up last week. The first thing he told me is "if I drop dead tomorrow, at least I had a few good years w/o having to work."

Oh, and this caught my eye:
Quote:
Neither is unlikely to boomerang.
It's just a typo, right? Seems your kids do very well, too.
__________________
RISP is offline   Reply With Quote
Old 03-24-2013, 09:45 AM   #13
Thinks s/he gets paid by the post
Live And Learn's Avatar
 
Join Date: Feb 2012
Location: Tampa Bay Area
Posts: 1,689
__________________
"For the time being no discipline brings joy, but seems grievous and painful; but afterwards it yields a peaceable fruit of righteousness to those who have been trained by it." ~
Hebrews 12:11

ER'd in June 2015 at age 52. Initial WR 3%. 50/40/10 (Equity/Bond/Short Term) AA.
Live And Learn is offline   Reply With Quote
Old 03-24-2013, 12:08 PM   #14
Thinks s/he gets paid by the post
 
Join Date: Jun 2004
Location: E. Wash
Posts: 1,058
PoorCarver
Congrats on your excellent planning and results. Not sure I can claim quite as good status but certainly understand how FUD (Fear Uncertainty and Doubt), can impact your willingness to move to the next step.
Just finished a couple books on "behavioral economics" which is a study of how people let their emotions and lack of analysis make economic decisions not in their best interest. The more technical book is Thinking Fast Thinking Slow by noble prize winner Daniel Kahneman. An easier read and does a good job of introducing the concept is Why Smart People make Big Money Mistakes, by Gary Belsky/Thomas Gilovich. They recently updated their 1999 and it is available in paperback. Both are easily acquired from Amazon. For me the hard copy versions proved helpful for both making notes as well as better viewing of some the examples, than what a Kindle version would provide.
Both of these tomes will give you great insight into the feelings you are having and perhaps provide you the confidence to act on your prior success. Now, because you can does not mean you have to take the leap BUT you will at least understand better why you are reluctant to move to the next stage of life and enjoy its fruits.
Nwsteve
__________________
nwsteve is online now   Reply With Quote
Old 03-24-2013, 01:25 PM   #15
Thinks s/he gets paid by the post
Katsmeow's Avatar
 
Join Date: Jul 2009
Posts: 3,397
I read your post with great interest as the ages of you and your wife are the same as DH and me. DH retired almost 3 years ago and I went to a very part-time schedule (10-15 hours a week).

We have a similar housing situation although our house and equity is about 2/3 of yours. Your desired spending is a little higher than ours long term, but our near-term spending is higher since we have kids who are younger and still under our support for 2 or 3 more years.

That said - our assets are quite a bit less than yours. If we had your assets I would quit my part-time work tomorrow. In fact DH and I have determined that I could quit my part-time work tomorrow but I haven't done so yet since I do feel it gives a cushion with us still having kids at home.

Now - everyone has his or her own sense of what is safe enough to retire. FWIW, DH retired with us having less than you have and I will fully retire when I find my work unfun (right now I still enjoy it).
__________________
Katsmeow is online now   Reply With Quote
Old 03-24-2013, 02:17 PM   #16
Recycles dryer sheets
 
Join Date: Jun 2009
Location: SoCal
Posts: 230
Poorcarver, you've beaten the analysis to death I think.

You're financially ready to go as soon as you're emotionally ready, as it seems fear is the only thing holding you back. Congratulations and I hope you and your family enjoy the next phase of your lives.
__________________
caninelover is offline   Reply With Quote
Old 03-25-2013, 09:20 AM   #17
Recycles dryer sheets
 
Join Date: Nov 2010
Location: Little Trailer Down By The River
Posts: 172
Thank you to all who replied. I admire the civility and candor that are found on this board. Experience tells me that this is due to excellent moderators. Thank you mod's for you efforts.

A few additional facts or remarks. I have been trying to get DW to quit for years, no soap. I am going to quit at the end of 2014 unless my employer decides to s**tc*n me sooner. Perhaps that will get her off the dime. She suffers from depression about as badly as one can and still function in the working world, so I doubt if she will quit.

I have a work from home, literally work anywhere on earth so long as I have internet access and a cell connection. I routinely travel to visit friends, working and visiting with smartphone at hand. With my laptop I have all the required files, contracts, drawings, etc. So unless I find some avocation I have to do that takes all day every day, I see no reason to stop drawing full pay and benefits. Nonetheless will stop next year.

As for "poor white trash". I would not offend for the world. Please accept my apologies. I grew up on the bad end of a bad town, my family was poor white trash and mostly still are. Dad died when I was six, Mom was violent and abusive. I got an ROTC scholarship to engineering school out of the blue and never really ever went back home. The Army, where I learned noting more than five years of jumping out of airplanes and killing whomever the government wanted dead, removed the vestige of education I had received. I worked in heavy industry for my entire career until I got smart and became a project manager for mega-corps. I have been treated with very little more than contempt by the financial folks who actually run heavy industry in this country. Engineering and maintenance staff and their budgets are part of overhead and treated accordingly. Interestingly in their calculation, the finance and accounting types are required, engineering not so much.

I read and study extensively, but I am afraid that you cannot make a silk purse out of a sow's ear.

As for things that will break the model, I fully expect SS benefits to be severely means tested as the country continues to deteriorate. I have no idea how to model that. Do I draw very little from my accounts to prepare for no SSN or do I take it all so that I have no means to test? I fully expect medical access and availability to severely decline with the better facilities being available only on a private fee basis. If you have the means to buy the better medicare supplement, you go to Mayo. If you don't you go to Cook County. I cannot imagine we are going to be able to arrive at an agreement nationally to resolve the three way tension between budget deficit, defense industrial interests and other requirements (medical care, infrastructure, SSN, etc.). In a few years, China will be the world's largest economy. How will the less well screwed together handle that little ego deflater? There are nuclear weapons in the hands of folks whose religious view is not friendly to the West. That should be enough. I have no idea of the probability of any of these items breaking my model. However, between them it seems a safe bet to question whether any sort of modeling based on the past provides assurance going forward.

The real issue for me, bottom line is what is the cost of failure? In a job situation if management don't like my work they can throw me out and I will get another job doing the same thing for the same money. But if one screws this up, there is no do over. You are just screwed.

Put it another way, frankly the accumulation of our funds was easy. We just naturally don't spend a lot of money, and having read Saint Bogle's book years ago, you do the simple, straightforward AA as described using Vanguard funds and let her run. But now I got to spend it, spend it right, manage withdrawals correctly. In other words, all I had to do before was dump money in and Vanguard took care of it, now I have to be responsible. Not comfortable with personal responsibility for risk.

I am certain my children would take care of the DW and I but I decline to be a charge on my children or anyone else for that matter.

And finally, yes I have heard of analysis paralysis. Watched managerial types tie themselves into that knot all my life. Amusing when you are an observer, not so much when it is your life.

Again, thank you for the excellent thoughts and validation of our financial situation. This whole retirement thing is like making a night jump, you can't see where you are going and there is no going back.

Best regards,
__________________
"Here's to them who would read,
Here's to them that would write.
There's none ever feared that the Truth would be heard,
But those whom the Truth would indict."

Robert Burns
poorcarver is offline   Reply With Quote
Old 03-25-2013, 11:22 AM   #18
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2006
Posts: 11,018
Poorcarver, financially you and DW seem to be in great shape. I think your analysis paralysis probably originates from insecurities in your childhood. I don't know what to advise you except just dive in.
__________________
Meadbh is offline   Reply With Quote
Old 03-25-2013, 01:47 PM   #19
Thinks s/he gets paid by the post
Live And Learn's Avatar
 
Join Date: Feb 2012
Location: Tampa Bay Area
Posts: 1,689
I hear you on the risks and fears. Quite honestly if SS is means tests based upon assets I will be screwed. My original retirement budget included contingenies that reduced SSI to 50% and reduced my assets by 25%. I'm happy to say that I've reduced that to SSI at 67% and assets by 10% which gives me a 95% success rate on a number of calculators. If it turns out that things end up worse then I hope it only makes things 10 - 15% worse which means I'll still have an 80 - 85% success rate and a 15 - 20% risk of failure. Odds still in my favor. Could ER'ing at 50 be a bad decision ? You bet ! Will I lose sleep several nights (when the markets are done and I question my deicions) - YOU BET ! Will it change my mind .... not any more ! I'm done with dreading the mornings. I'm ready to live !

It seems that you truly enjoy your work and that it doesn't cause you stress. Therefore I have to worry if the OMY syndrome is because you feel you will actually be happier working. If thats the case then do it ! I don't know about you, but my goal is happiness !
__________________

__________________
"For the time being no discipline brings joy, but seems grievous and painful; but afterwards it yields a peaceable fruit of righteousness to those who have been trained by it." ~
Hebrews 12:11

ER'd in June 2015 at age 52. Initial WR 3%. 50/40/10 (Equity/Bond/Short Term) AA.
Live And Learn is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


 

 
All times are GMT -6. The time now is 05:03 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.