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Want to get out of the rat race and do something I like!!!
Old 04-01-2018, 05:35 AM   #1
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Want to get out of the rat race and do something I like!!!

Hi,
I have been viewing this forum for a while. Lots of information I can learn from planning stage to FIRE stage which is very valuable to me. Thank you all for contributing to this.

I have been seriously planning for my early retirement almost 15 years back and have been on this journey since. I think I am close to FIRE but would like to get your views on my plan and give me some advice.

My current situation:

47yrs man and 46yrs old housewife with 3 kids (17,16,12)
Working for MegaCorp for 20yrs - have been on a few expat assignments which enables me to save ~150K/yr while traveling around the world when we are still young!
Total NW: $4.2M ($2.6M half in taxable stock/Mutual fund/ETF and half in 401K; $0.4M in 529; $0.3M cash; $0.5M estimated pension, $0.4M paid off house)
No debt and no plan to have any debt! I am allergic to it! :-)

My plan:

Retire by 55 when my youngest child going to college. By this time we should have done enough overseas traveling and plan to travel through all 50 states. Once done, settle down and do volunteering works such as teaching kids, running crossfit exercises, helping people...
Estimated NW by time of retirement ~5.3M (assumed 5-6% RoR on my investible assets)

My spending:

Current spending about $120K
Expect to keep the same spending $100-120K/yr into retirement

Is my plan realistic?
DeFreeMan - want to be
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Old 04-01-2018, 05:40 AM   #2
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This is the best way I know to answer your question: Some Important Questions to Answer Before Asking - Can I Retire?
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Old 04-01-2018, 06:01 AM   #3
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Quote:
Originally Posted by DeFreeMan View Post
....
Total NW: $4.2M ($2.6M half in taxable stock/Mutual fund/ETF and half in 401K; $0.4M in 529; $0.3M cash; $0.5M estimated pension, $0.4M paid off house)
No debt and no plan to have any debt! I am allergic to it! :-)

....Current spending about $120K
Expect to keep the same spending $100-120K/yr into retirement

Is my plan realistic?
DeFreeMan - want to be
$120k/$3.4m= 3.5%... plus the $3.4m will grow from now until you retire from returns and contributions so your WR will be even lower, so yes... in fact, you could probably retire earlier if you want... even now depending on your college funding plans.

Will you also receive SS?
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Old 04-01-2018, 06:06 AM   #4
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Originally Posted by pb4uski View Post
$120k/$3.4m= 3.5%... plus the $3.4m will grow from now until you retire from returns and contributions so your WR will be even lower, so yes... in fact, you could probably retire earlier if you want... even now depending on your college funding plans.

Will you also receive SS?
I think yes but my conservative calculation and plan not include SS! I ran FIRECalc and it seems that if I use 3% withdrawal rate I should have 100% chance.
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Old 04-01-2018, 06:14 AM   #5
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While it is prudent to be conservative, IMO it is foolish to be unduly conservative... the likely end result of being unduly conservative is that you sacrifice and/or work longer than yuo need to and end up making your kids rich heirs.

IMO it is prudent to haircut SS for possible funding shortfalls or means testing reductions... but foolish to ignore it entirely.

Also, have you done a pro forma tax calculation based on your retirement income to see what your taxes will be and factored that into your $120k of spending. For many people, taxes drop dramatically once retired and if your $120k of spending includes taxes then it may be too high.... if it excludes taxes then it may be too low.

Since you are close now, have you considered hanging it up earlier?
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Old 04-01-2018, 08:19 AM   #6
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Is my plan realistic?
Seems fine.
Just keep saving until you decide the time is right.
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Old 04-01-2018, 10:31 AM   #7
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Originally Posted by pb4uski View Post
While it is prudent to be conservative, IMO it is foolish to be unduly conservative... the likely end result of being unduly conservative is that you sacrifice and/or work longer than yuo need to and end up making your kids rich heirs.

IMO it is prudent to haircut SS for possible funding shortfalls or means testing reductions... but foolish to ignore it entirely.

Also, have you done a pro forma tax calculation based on your retirement income to see what your taxes will be and factored that into your $120k of spending. For many people, taxes drop dramatically once retired and if your $120k of spending includes taxes then it may be too high.... if it excludes taxes then it may be too low.

Since you are close now, have you considered hanging it up earlier?
Totally agree with you! I just wanted to make sure my plan works without SS and SS is the the icing on the cake.

My plan with $120K is after tax. Assume 30% tax bracket that pushes it to $160K withdrawal rate of 3% x $5.2M.

I do consider hanging up earlier but just could not convince my wife as she wants to leave more $$ for our kids and parents. I kinda agree with it since I need more time to think of what I will do in retirement to fill in the time and fulfill my life.
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Old 04-01-2018, 10:50 AM   #8
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Totally agree with you! I just wanted to make sure my plan works without SS and SS is the the icing on the cake.
I did the same thing when planning for retirement. I retired 12 years ago, and there was a lot of noise back then about SS "going away". I figured that since I didn't actually have control over that money I wouldn't count it in my FIRE calculations. I was always aware I would probably get at least some portion of it. And since I have a DD and she has kids too I would like to leave them an inheritance. So whatever SS eventually allows me to not withdraw from my investments will become part of that inheritance. Or if I get a wild hair I can spend it later. But I'm pretty happy with my lifestyle so it will probably get passed on.

I don't think it's foolish to not count SS, just ultra conservative. Which is what I am, financially.
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Old 04-01-2018, 11:04 AM   #9
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Your situation sounds much like where I was when I was 47, 19 years ago. I targeted ER at 58 but at 55 left the corporate world. In my case, I had hit my saving target but not my age. I found a way to reduce my spending, which in retrospect was not required given the greater than expected market gains.

From what you shared, I think your plan is very good and I am sure you will have flexibility if you need it. As others have shared, use the retirement calculator tools for more piece of mind.
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Old 04-01-2018, 11:22 AM   #10
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Originally Posted by harley View Post
I did the same thing when planning for retirement. I retired 12 years ago, and there was a lot of noise back then about SS "going away". I figured that since I didn't actually have control over that money I wouldn't count it in my FIRE calculations. I was always aware I would probably get at least some portion of it. And since I have a DD and she has kids too I would like to leave them an inheritance. So whatever SS eventually allows me to not withdraw from my investments will become part of that inheritance. Or if I get a wild hair I can spend it later. But I'm pretty happy with my lifestyle so it will probably get passed on.

I don't think it's foolish to not count SS, just ultra conservative. Which is what I am, financially.
Thank you! You spoke my mind. I can't rely on government to manage SS to the time I am eligible for SS. Rather, I treat it as cushion for my plan to make sure I have flexibility. Also, $120K spending in retirement is quite generous already. I could budget it about 70% of that and we are still doing fine.

Any post retirement wisdom/lessons learned that you can pass on?

Cheers!
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Old 04-01-2018, 11:29 AM   #11
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Originally Posted by davef View Post
Your situation sounds much like where I was when I was 47, 19 years ago. I targeted ER at 58 but at 55 left the corporate world. In my case, I had hit my saving target but not my age. I found a way to reduce my spending, which in retrospect was not required given the greater than expected market gains.

From what you shared, I think your plan is very good and I am sure you will have flexibility if you need it. As others have shared, use the retirement calculator tools for more piece of mind.
Thanks Davef - Very similar to my plans: P50 is 55, P80 is 58 and P10 is 50 years old - depending on the market. The other wild card is healthcare which is hard to cope with. By 50, I can be eligible for Cobra with corporate discount healthcare plan until 65 when I can switch to Medicare. I need to get to 50 before thinking of the free date of 55!
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