Join Early Retirement Today
Closed Thread
 
Thread Tools Search this Thread Display Modes
Want to do Retire, but can't get Math to Work
Old 07-08-2017, 09:43 AM   #1
Recycles dryer sheets
 
Join Date: Jul 2017
Posts: 74
Want to do Retire, but can't get Math to Work

Age: 49
Wife Age: 57

Pension at 65: $5.4K (no annual increase)
Wife Pension at 65: $12.5K (no annual increase)

SS at 65: $21.3K
Wife SS at 65: $23.6K

Part Time Job til 65: $35K/Year
Wife Works til 65: $60K/year

Only place to buy Healthcare is through company Retiree plan: $20K/yr

Retirement Savings: $3.25M (various different types of accounts)

Annual Expenses, including HC: $190K


There are a million other details I can provide and I am sure I need to do so to get good insights from the collective wisdom of the board. But I thought I would provide some basics to get things started. Please let me know what else to add.

I look forward to learning from all of you.

Would like to retire on 12/31. I will be just shy of 50 then. Call it 50.

Thanks in advance.
__________________

ivanl3 is offline  
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 07-08-2017, 10:01 AM   #2
Thinks s/he gets paid by the post
nash031's Avatar
 
Join Date: Jun 2013
Location: Coronado
Posts: 1,726
For the next 8 years, you need $95K from your portfolio, a WR of 2.9%.

For the following 8 years, you need (190K - 35K - 23.6K - 12.5K) = 112K, a WR of 3.65%

For the remainder of time, you need (190K - 23.6 - 21.3 - 5.4 - 12.5) = 127.5K, a WR of 3.9%.

That's all overly simplified, doesn't include inflation or returns. You need to run FIRECalc to get more certainty.

Are you sure you need 190K after you retire? Some folks find expenses go down after retirement as they drive less, don't spend as much on clothes, etc. Others, not so much. House ever going to be paid off? That might reduce your spending.

There's a lot of variables to it, but back of the napkin tells me you are close, if not there.
__________________

__________________
"So we beat to our own drummer in the sun;
We ask for nobody's permission to run.
I just wanna live in a world like that;
Now I'm gonna live in a world like that!" - World Like That, O.A.R.
nash031 is offline  
Old 07-08-2017, 10:03 AM   #3
Thinks s/he gets paid by the post
 
Join Date: Mar 2015
Posts: 2,635
Are you sure that you will require $190k in expenses throughout your retirement? Have you explored ways to reduce that?

Have you run the numbers if you both delay your social security benefits until 70?

Why is the company plan the only place you can purchase healthcare? Have you considered the ACA marketplace? $20k seems expensive for many locales.

You haven't mentioned housing. Do you have a mortgage? Will you downsize and/or move?
__________________
Old enough to know better.
joeea is offline  
Old 07-08-2017, 10:07 AM   #4
Recycles dryer sheets
 
Join Date: Jul 2017
Posts: 74
Quote:
Originally Posted by nash031 View Post
For the next 8 years, you need $95K from your portfolio, a WR of 2.9%.

For the following 8 years, you need (190K - 35K - 23.6K - 12.5K) = 112K, a WR of 3.65%

For the remainder of time, you need (190K - 23.6 - 21.3 - 5.4 - 12.5) = 127.5K, a WR of 3.9%.

That's all overly simplified, doesn't include inflation or returns. You need to run FIRECalc to get more certainty.

Are you sure you need 190K after you retire? Some folks find expenses go down after retirement as they drive less, don't spend as much on clothes, etc. Others, not so much. House ever going to be paid off? That might reduce your spending.

There's a lot of variables to it, but back of the napkin tells me you are close, if not there.
The 190K is after tax.

I've already factored in reduced spending (very little).

We have no mortgage. House is worth about $400K.

Plan to reduce spending by $5K when I hit 65, and another $5K when I hit 75. Don't know how to enter that in to FIRE.

Do not expect to live past 85. Have had health issues. 90 is not happening for me. Assume wife will make it to 90. Don't know how to enter that into FIRE

The pension and SS income listed do not kick in until we turn 65 respectively, not when I initially retire. You seem to be assuming some start immediately (unless I misunderstand something).
ivanl3 is offline  
Old 07-08-2017, 10:07 AM   #5
Full time employment: Posting here.
USGrant1962's Avatar
 
Join Date: Dec 2016
Location: DC area
Posts: 898
Your annual expenses jump out as quite high. Have you considered that after ER you will pay much less tax, won't contribute to 401(k), won't buy certain insurances, won't commute, etc?

Having said that, if I'm reading your post right your numbers should work.

Conservative 3.25% withdrawal on $3.25M is $105K. Add your PT work and wife's income and you get $200K/yr. Then your WR drops to ~2% when SS and pensions kick in.

Or are you saying retire to no PT work after 50?
__________________
Semi-ER March 24, 2017
USGrant1962
USGrant1962 is offline  
Old 07-08-2017, 10:09 AM   #6
Thinks s/he gets paid by the post
 
Join Date: Mar 2013
Location: Coronado
Posts: 1,095
I agree with Nash that you should put your numbers into Firecalc and see what you get. I suspect you're there, especially if your expenses are really a little less than $190K.

One thing to be careful about is the age for SS. Your FRA is 67, not 65. Your wife's is either 66.10 or 67, depending on when her birthday is, so make sure you're using the appropriately discounted numbers if you plan to take it early at 65. You may want to play with SS' AnyPIA tool to get better estimates for these numbers.
cathy63 is offline  
Old 07-08-2017, 10:10 AM   #7
Recycles dryer sheets
 
Join Date: Jul 2017
Posts: 74
Quote:
Originally Posted by joeea View Post
Are you sure that you will require $190k in expenses throughout your retirement? Have you explored ways to reduce that?

Have you run the numbers if you both delay your social security benefits until 70?

Why is the company plan the only place you can purchase healthcare? Have you considered the ACA marketplace? $20k seems expensive for many locales.

You haven't mentioned housing. Do you have a mortgage? Will you downsize and/or move?
No mortgage. House worth about $400K. No plans to downsize.

$20K is the current rate from my company for retirees. ACA is slightly cheaper for us, but deductible and flexibility of providers make the company plan better option. I am a cancer survivor (in remission only about 1.5 years). Still high risk period of return. Don't want to risk not being able to see best providers or a crazy deductible.
ivanl3 is offline  
Old 07-08-2017, 10:12 AM   #8
Recycles dryer sheets
 
Join Date: Jul 2017
Posts: 74
Quote:
Originally Posted by cathy63 View Post
I agree with Nash that you should put your numbers into Firecalc and see what you get. I suspect you're there, especially if your expenses are really a little less than $190K.

One thing to be careful about is the age for SS. Your FRA is 67, not 65. Your wife's is either 66.10 or 67, depending on when her birthday is, so make sure you're using the appropriately discounted numbers if you plan to take it early at 65. You may want to play with SS' AnyPIA tool to get better estimates for these numbers.
I got those numbers directly from SS website assuming age 65 for each of us.
ivanl3 is offline  
Old 07-08-2017, 10:14 AM   #9
Recycles dryer sheets
 
Join Date: Jul 2017
Posts: 74
Quote:
Originally Posted by USGrant1962 View Post
Your annual expenses jump out as quite high. Have you considered that after ER you will pay much less tax, won't contribute to 401(k), won't buy certain insurances, won't commute, etc?

Having said that, if I'm reading your post right your numbers should work.

Conservative 3.25% withdrawal on $3.25M is $105K. Add your PT work and wife's income and you get $200K/yr. Then your WR drops to ~2% when SS and pensions kick in.

Or are you saying retire to no PT work after 50?
Thanks. Yes I considered the reduced expenses already.

PT work would begin at retirement and end in 8 years.

Here is the missing link I think. The $3.25M is in various accounts -- some are taxable some are not. See below



What is WR?
ivanl3 is offline  
Old 07-08-2017, 10:35 AM   #10
Thinks s/he gets paid by the post
 
Join Date: Dec 2014
Posts: 2,238
WR == withdraw rate = annual withdraw from assets/total assets

pensions and SS become cash flow to reduce the amount you need to withdraw from assets.
bingybear is offline  
Old 07-08-2017, 10:43 AM   #11
Recycles dryer sheets
 
Join Date: Jul 2017
Posts: 74
Here is the $3.25M i referenced. Hopefully worth more by 12/31

Plan to invest most of cash upon retirement. Big chunk of that is the severance I would get if I leave on 12/31. Rest (about $90K) is true cash on hand.
Attached Images
File Type: jpg Money.jpg (29.7 KB, 145 views)
ivanl3 is offline  
Old 07-08-2017, 10:48 AM   #12
Recycles dryer sheets
 
Join Date: Jul 2017
Posts: 74
Quote:
Originally Posted by USGrant1962 View Post
Your annual expenses jump out as quite high. Have you considered that after ER you will pay much less tax, won't contribute to 401(k), won't buy certain insurances, won't commute, etc?

Having said that, if I'm reading your post right your numbers should work.

Conservative 3.25% withdrawal on $3.25M is $105K. Add your PT work and wife's income and you get $200K/yr. Then your WR drops to ~2% when SS and pensions kick in.

Or are you saying retire to no PT work after 50?
I did mention that the $190K would be reduced by $5K at age 65 (me) and another $5K at age 75 (me). But FIRE doesn't let me do that.
ivanl3 is offline  
Old 07-08-2017, 10:59 AM   #13
Thinks s/he gets paid by the post
ivinsfan's Avatar
 
Join Date: Feb 2007
Posts: 4,101
IMO you shouldn't be counting your spouse's wages...things can change..it's not easy for some people to work FT until 65
ivinsfan is offline  
Old 07-08-2017, 11:03 AM   #14
Thinks s/he gets paid by the post
 
Join Date: Dec 2014
Posts: 2,238
Quote:
Originally Posted by ivanl3 View Post
Here is the $3.25M i referenced. Hopefully worth more by 12/31

Plan to invest most of cash upon retirement. Big chunk of that is the severance I would get if I leave on 12/31. Rest (about $90K) is true cash on hand.
Much of what you have is pre-tax. If you take that severance all at once... do you know how much will be lost to taxes.

You need to look at how you can take $ and how much will be sucked by the tax man. If you take too large of a chunk and the tax man take his share, you may be working on much less than you are planning
bingybear is offline  
Old 07-08-2017, 11:04 AM   #15
Recycles dryer sheets
 
Join Date: Jul 2017
Posts: 74
Quote:
Originally Posted by ivinsfan View Post
IMO you shouldn't be counting your spouse's wages...things can change..it's not easy for some people to work FT until 65
Thanks, I agree. She actually makes about $110K now, so I reduced it to about $60K for that risk.

She sells real estate and averages about $110K over the last 20 years (that includes the crash).

Granted, if something happened where she did not work at all, I have an issue, but assuming no income seemed too far the other way I think.

The way I really view it is that she+me would have to make ~95K per year somehow if I left my job.
ivanl3 is offline  
Old 07-08-2017, 11:06 AM   #16
Recycles dryer sheets
 
Join Date: Jul 2017
Posts: 74
Quote:
Originally Posted by bingybear View Post
Much of what you have is pre-tax. If you take that severance all at once... do you know how much will be lost to taxes.

You need to look at how you can take $ and how much will be sucked by the tax man. If you take too large of a chunk and the tax man take his share, you may be working on much less than you are planning
The severance amount assumed is after tax.

But the tax man definitely will take a chunk out of those retirement accounts I listed.

When FIRE asks me to enter my Income on front page, is that pre or post tax? I need to go check that. I'm sure it says
ivanl3 is offline  
Old 07-08-2017, 11:10 AM   #17
Full time employment: Posting here.
USGrant1962's Avatar
 
Join Date: Dec 2016
Location: DC area
Posts: 898
Quote:
Originally Posted by USGrant1962 View Post
Your annual expenses jump out as quite high. Have you considered that after ER you will pay much less tax, won't contribute to 401(k), won't buy certain insurances, won't commute, etc?

Having said that, if I'm reading your post right your numbers should work.

Conservative 3.25% withdrawal on $3.25M is $105K. Add your PT work and wife's income and you get $200K/yr. Then your WR drops to ~2% when SS and pensions kick in.

Or are you saying retire to no PT work after 50?
Sorry, error on my part. Your WR (withdrawal rate) will be just about 4% when SS and pensions kick in - which is risky for a 40+ year retirement. I played around with FIRECalc a little bit and confirmed that you are not quite there yet but are close.

Here's a first cut at your numbers in FC:

FIRECalc: A different kind of retirement calculator

You have a few too many income streams for basic FIRECalc, so i neglected your late-life spending reductions and did a math trick on to represent your transition from work to pensions (deducted the difference from your income).
__________________
Semi-ER March 24, 2017
USGrant1962
USGrant1962 is offline  
Old 07-08-2017, 11:11 AM   #18
Recycles dryer sheets
 
Join Date: Jul 2017
Posts: 74
I see FIRE wants me to include Tax as an expense. My $190K did not include taxes. But based on my investments listed above, I don't know what to enter. This is where this whole thing gets so messy for me. If I just gross it up by 30%, that is too conservative, but cannot ignore taxes.

Ugh!!
ivanl3 is offline  
Old 07-08-2017, 11:15 AM   #19
Recycles dryer sheets
 
Join Date: Jul 2017
Posts: 74
Quote:
Originally Posted by USGrant1962 View Post
Sorry, error on my part. Your WR (withdrawal rate) will be just about 4% when SS and pensions kick in - which is risky for a 40+ year retirement. I played around with FIRECalc a little bit and confirmed that you are not quite there yet but are close.

Here's a first cut at your numbers in FC:

FIRECalc: A different kind of retirement calculator

You have a few too many income streams for basic FIRECalc, so i neglected your late-life spending reductions and did a math trick on to represent your transition from work to pensions (deducted the difference from your income).
Thanks. Looks to me like the entry you made assumes we will work PT forever. We only wanted to do this for 8 years.

But don't see the pensions either.

I don't think FIRE is flexible enough for me.
ivanl3 is offline  
Old 07-08-2017, 11:28 AM   #20
Moderator
Aerides's Avatar
 
Join Date: Nov 2015
Posts: 3,045
That 190k expenses for two, with no mortgage... seems still very high. 170 after HI, still. Ofc, you may life in a high COL area or have some other big ticket?

(and personally, if I had guaranteed employer care for $20k per year for two ppl, I'd take it, so in this environment that might be a good deal).
__________________

Aerides is offline  
Closed Thread


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


Similar Threads
Thread Thread Starter Forum Replies Last Post
Used cars, does the math work? orangehairfella FIRE and Money 113 11-29-2016 06:58 PM
Big-Name Investors Get Long, Get Loud and Get Richer timo2 Stock Picking and Market Strategy 2 08-16-2013 08:02 AM
Nice work if you can get it... ziggy29 Other topics 10 07-01-2009 06:22 PM
I think I can, I think I can, but why am I afraid? behappy Hi, I am... 30 09-26-2007 10:29 PM
Why walk to work when you can walk AT work? Nords Health and Early Retirement 5 05-16-2007 10:05 PM

» Quick Links

 
All times are GMT -6. The time now is 01:38 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2019, vBulletin Solutions, Inc.