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Old 07-09-2017, 01:28 PM   #1
Dryer sheet wannabe
 
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Sense Check Please

Greetings All. I just joined after following for quite a while. New and totally on board with this (I watch Office Space every Sunday just to keep my sanity)
- now I just have to get the spouse on board - laughs. I'm always amazed by the looks of others whenever I mention retirement or retirement planning - when did it become such a dirty phrase? I'm 46, married with 2 kids (1 is wonderful, the other - not so much )

Hit the proverbial individual contributor ceiling in IT about 15 years ago - make low six figures but honestly, in northern NJ, that's no great shakes. Benefits are very good, however.

Have the following information to share:

Kids colleges costs are well funded with 529's:
- 1st (currently entering Jr. year) will enter Sr. Year with no Debt - Sr. Year will be pay as we go
- 2nd has 70K+ and is definitely scholarship worthy based on grades thus far

Made Decision to Pay Off Mortgage (24K Balance) September 2017 (Approximately 400K in Equity but house will require some work)

Current living expenses will be ~60K (after mortgage paid off) but we're definitely ready to move in 3.5 years when my younger one graduates high school and I become pension eligibility (age 50).

Assuming we can maintain living expenses at around 60K annually (aside from medical), is there a ballpark number we should be looking at in order to FIRE at 50? We just literally passed 7 figures i(excluding home equity) n total with 90% of that in 401Ks or Traditional IRA. So, now our focus is on hammering the brokerage accounts after the mortgage is paid off/for the next 3 to 4 years (100-130K/annually).

Also, what do most folks do for medical insurance? That is my real concern but I also will not work just to pay for medical insurance - that's completely backward to me. Is the catasrophic medical popular even for those couples with 1 between 18-24?

Thank You for the feedback.
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Old 07-09-2017, 01:38 PM   #2
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Welcome !

I retired at 52. At that age I wanted my maximum withdrawal rate to be 3% of my "investable assets" (ie: I excluded home equity). Is that a good number ? Who knows. But it was where I was comfortable.

If you cannot get health insurance through your job as a retiree you will have to purchase on the open market. You can look up current ACA costs at https://www.healthsherpa.com/

When I did my budget I assumed that we would both hit our Out of Pocket maximum each year. I figured whatever we didn't spend could be used for travel the subsequent year. Now I am glad I did that because of the current proposed changes in our healthcare system. My overcautiousness gives me a level of comfort that I will still be able to cover whatever may happen.

I can't answer on the catastrophic policies but I'm sure someone will come along who can.
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Old 07-09-2017, 01:47 PM   #3
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Welcome to the forum! As you know health insurance is a huge issue for lots of people. Will you be able to use COBRA for a while after retiring? Many people find that helps reduce the cost for the first 18 months, then go to either an individual policy or ACA policy.

If you haven't already seen it here is a list of questions that you will want to have answers to before pulling the plug:

Some Important Questions to Answer Before Asking - Can I Retire?
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Old 07-09-2017, 01:53 PM   #4
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Welcome jt! Have you run your numbers through FIREcalc (link at the bottom of each page) or another retirement calculator? That will give you an idea of what you should be looking at in terms of investments to go along with your pension, etc. Also tracking spending in detail for a few years can be very helpful in setting your targets.

As Walt34 mentioned above, the list of questions to answer is pretty comprehensive and should be helpful.

Obviously, medical costs (insurance, deductibles, etc.) are a big concern for most looking to ER and there are enough unknowns and moving parts that I think most folks are budgeting very conservatively. There are a lot of threads on the forum that address options more specifically.
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Old 07-09-2017, 02:09 PM   #5
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Thank You Walt, Austin and L&L...I'll look at the list of Q's Walt referenced and also get that FIREcalc going...seems like healthcare is the hot button...3% may just be doable...gotta run the #'s.
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Old 07-09-2017, 02:17 PM   #6
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Welcome to the forum jt! Definitely run retirement calculators (FIREcalc, fidelity, etc) but based on generally accepted rules of thumb for a withdawal rate between 3% (conservative) and 4% (fairly aggressive) for ER in early 50-ies, you'll need between 1.5 and 2 million to generate the 60k you need. So, if you ignore health insurance, then you should be able to pull it off with another 4 years of saving and maybe downsizing your residence. However, insurance will likely add another 10-20k that have to be funded somehow.
This is ignoring any pensions you might have coming and not counting SS (which will obviously help out a lot, once you are eligible).
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Old 07-09-2017, 02:32 PM   #7
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Quote:
Originally Posted by jt999 View Post
I'm always amazed by the looks of others whenever I mention retirement or retirement planning - when did it become such a dirty phrase? -
Assuming we can maintain living expense

Thank You for the feedback.
It became dirty when they spent more than they made. When they bought new cars and you didnt, when they ate out for lunch and you brown bagged it, when you bought cheap non designer names and they had the latest fashion. When they went on vacation and you had a staycation. When you lived in a basement apt with well worn furniture and they had a nice place to live. when you got up 90 minutes earlier to take the bus and train instead of driving. when you ate balony sandwiches and they ordered roast beef. Now that your in the drivers seat they want what you have.
Good for you! Now ply around with different Asset Allocations(AA), find something you are comfortable with. Some one said and i agree you might think a 30 % drop is doable. Till you lived through it its a different story. Play around with and without soc security. You will find your place. Best of luck, in my book your a winner.(the above rant was describing my spending when I was in the struggling /saving/accumulation stage YMMV)
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Old 07-09-2017, 02:57 PM   #8
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To be honest, I never felt like we roughed it - looking back, we did 3 critical things;
- maxed out 401K from mid-20's to early 40's...we scaled this back the last couple of years to get the full employer match
- we saved until we had 20% down (no PLI - EVER, NEVER) and never sought to upgrade and re-fi's to 15 yr/bi-weekly to reduce interest expense
- we made relatively modest monthly cotributions to 529s and started as soon as they had SS #'s

So when I look at SS, I'm aware that early benefits would could be taken at 62 - if I assume I stop working at 50 (realistically, it may be later but I can dream)...you have to count in zeroes for anything less than 35 years worked - correct? Does anybody know how to reflect this? Is it reduced proportionally for years not worked (working 25 years means we take a zero for 10 years, so 25/35 (or 71%)...is that right?
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Old 07-09-2017, 02:58 PM   #9
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Quote:
Originally Posted by jt999 View Post
To be honest, I never felt like we roughed it - looking back, we did 3 critical things;
- maxed out 401K from mid-20's to early 40's...we scaled this back the last couple of years to get the full employer match
- we saved until we had 20% down (no PLI - EVER, NEVER) and never sought to upgrade and re-fi's to 15 yr/bi-weekly to reduce interest expense
- we made relatively modest monthly cotributions to 529s and started as soon as they had SS #'s

So when I look at SS, I'm aware that early benefits would could be taken at 62 - if I assume I stop working at 50 (realistically, it may be later but I can dream)...you have to count in zeroes for anything less than 35 years worked - correct? Does anybody know how to reflect this? Is it reduced proportionally for years not worked (working 25 years means we take a zero for 10 years, so 25/35 (or 71%)...is that right?
Thats why I added that it was my roughing it story. Glad your glide path was easier. You still won the game, enjoy!
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Withdrawal Rate currently zero, Pension 137 % of our spending, Wasted 5 years of my prime working extra for a safe withdrawal rate. I can live like a King for a year, or a Prince for the rest of my life. I will stay on topic, I will stay on topic, I will stay on topic
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Old 07-09-2017, 03:13 PM   #10
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Quote:
Originally Posted by jt999 View Post
T
So when I look at SS, I'm aware that early benefits would could be taken at 62 - if I assume I stop working at 50 (realistically, it may be later but I can dream)...you have to count in zeroes for anything less than 35 years worked - correct? Does anybody know how to reflect this? Is it reduced proportionally for years not worked (working 25 years means we take a zero for 10 years, so 25/35 (or 71%)...is that right?
On the SS web site you can get an estimate of benefits but by default it assumes that you're working until you start SS. Do that first, and then click the button for a second estimate. That's where you can tell the system that your income after a certain date will be zero. For most people it makes a surprisingly small difference.
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Old 07-09-2017, 03:15 PM   #11
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Does anybody know how to calculate Monthly Social Security Benefits if you work 25 of the 35 years and take SS early at 62 - using average wages of $80,000?
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Old 07-09-2017, 04:22 PM   #12
Dryer sheet wannabe
 
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Walt - you were right - it's better than I thought it would be - maybe I need to check with a stop working age of 47
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Old 07-10-2017, 10:13 AM   #13
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I know the looks you are talking about VERY well. I originally retired from the military at age 38. The looks got the point that I stopped telling people I was retired and instead said I was between jobs. I eventually went back to work at a second career and will be retiring again in 2023!
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