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Old 04-04-2012, 11:20 PM   #41
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Old 04-04-2012, 11:33 PM   #42
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Harley:
...well, I most certainly have not lived my life doing "anything" rashly....but this did all happen within a 3 week timespan. Absolutely no intention of going,...and then gone by the 1st of the month. I did scramble and get 3 different professional "opinions" just on whether I could do this....more than whether I should do it. I did not leave my career of 26 years with the intent of NOT WORKING....but am trying to determine if that is in the realm of possibility or not. Working at something until at least 60, ...in my case...will make the most sense and may be how I handle this sudden life challenge. Thanks for seeing the situation as it was, rather than some short sighted impetuous haphazard lark. I appreciate all the comments and have taken each one to heart....no matter what angle they have been pitched at.
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Old 04-05-2012, 12:02 AM   #43
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Originally Posted by phoneguy55 View Post
I could do without a hefty mortgage and a big car payment and a few other expenditures in my mid 60's, much better than I can imagine doing without them now. I guess with inflation requiring more per year, and my willingness to lower my needs in 8 to 10 years, it may be a wash, but in my naive view of the future, I am thinking Soc.Sec. plus whatever that lump sum amount in an IRA will give me by 62, should allow for a lower, but comfortable income as I wind down.
You can find backup to your intuition on reduced spending needs as you age, but also opinions that say counting on it adds considerable longevity risk to your financial plan.

Finance and retirement author Scott Burns (linked as a "quick link" on the er.org home page) has written about this a number of times. He and collaborator Lawrence Kotlikoff call it "consumption smoothing". Here's one recent example:

Burns: In retirement, should you eat dessert first? - Houston Chronicle

Search the term on er.org and you'll find some additional threads on the subject.

Congrats, phoneguy. You getting valuable advice from all, even when they disagree. Reading, learning, thinking, and asking are all beneficial to you at this time. "Buying" most likely isn't.
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Old 04-05-2012, 08:11 AM   #44
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HTown Harry:....
Thanks for the link and the information about "consumption smoothing" . I read quite a bit about it since I saw your post last night. Since I am not one to be wreckless ( by any means) I will always err on the side of needing more than I can even envision as I get older. But !...with that being said, and staying ever vigilant to not burning any bridges for myself, I still think that ( just for me) hedging a little for NOW against having more when over 70 or so, still seems important. My portfolio is by no means adequate for me to just think I am set til the "end". If I decide to not return to work then my options are to expect an even distribution from now til the end, which will mean a considerable drop in lifestyle, or (sensibly) try to enjoy the next 8 to 10 years (now 56) with as close to my old lifestyle as I can. If I had stayed working at my "well paid" job until 66 or so, I would have had the better lifestyle until then, and would have saved much more to live well from then on. But, here I am....with the cards I was dealt. Every day this site seems to add another variable to the complex formula ( haven't worked with quadratic equations in a while ....whew) that will help me solve for "x". Thanks for the insights, as always.
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Old 04-05-2012, 10:50 PM   #45
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Originally Posted by phoneguy55 View Post
HTown Harry:....
Thanks for the link and the information about "consumption smoothing" . I read quite a bit about it since I saw your post last night. Since I am not one to be wreckless ( by any means) I will always err on the side of needing more than I can even envision as I get older. But !...with that being said, and staying ever vigilant to not burning any bridges for myself, I still think that ( just for me) hedging a little for NOW against having more when over 70 or so, still seems important. My portfolio is by no means adequate for me to just think I am set til the "end". If I decide to not return to work then my options are to expect an even distribution from now til the end, which will mean a considerable drop in lifestyle, or (sensibly) try to enjoy the next 8 to 10 years (now 56) with as close to my old lifestyle as I can. If I had stayed working at my "well paid" job until 66 or so, I would have had the better lifestyle until then, and would have saved much more to live well from then on. But, here I am....with the cards I was dealt. Every day this site seems to add another variable to the complex formula ( haven't worked with quadratic equations in a while ....whew) that will help me solve for "x". Thanks for the insights, as always.
In my opinion consumption smoothing is the most useful way to plan. I recommend reading Kotlikoff's and Burns's "Spend 'Til the End." I also recommend Kotlikoff's planning software, Esplanner, from esplanner.com. It's not free and it has a significant learning curve. But it handles multiple, non-concurrent streams of income well, knows the SS rules for you and your spouse, knows the Federal tax tables and the tax tables of all the states, handles annuities, upcoming one-time expenditures such as replacing a car, and more. So, for instance, I use Esplanner to answer planning questions for me, such as: if I retired abroad at age 62, delayed taking SS until 70, how much more disposable income would I have under my assumptions for return rates, inflation, etc. (The answer was 25%, a much bigger difference than I could expect from improving portfolio returns by the way.)

In my opinion, you are now in a crisis of survival, because your labor earnings have been cut short in the last years of relatively high earning/saving when you need it most. You can certainly forget about using the rule-of-thumb of the 4% so-called Safe Withdrawal Rate since that was calculated for a thirty year period beginning at 65. By leaving the workforce at 56, you face a much more severe financial problem.

My own priority is to avoid running out of money for myself and my wife. I am quite willing to sacrifice some current consumption to achieve that. I would not expect to be consoled when I am old, sick and broke with memories of wonderful vacations of the past. But your priorities may well be different. If I were in your shoes with my priorities I would try to get another job while I still could since that would make the biggest difference in financing your retirement. The next most effective step would be to reduce your cost of living as much as possible. Savings go right to the bottom line and are tax-free, as you know. As I mentioned in a previous post, you could consider relocating or taking in a roommate or moving into a shared household. Doesn't sound very appealing, does it? And yet, making effective savings moves soon could make a big difference in your chances for survival. (I have one acquaintance who went from being poor in Brooklyn to living well and within his means in Mexico and enjoying life immensely.) Frankly, your interest in enjoying your current lifestyle for the next few years (which means spending more than you can afford) sounds like a prescription for disaster. The question is not about having more when you are 70, but of having enough when you are 70 or 75 or 85.

I do hope things work out for you. You still have plenty of options. I hope you approach them with an open mind to come up with the best solution.
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Old 04-05-2012, 11:22 PM   #46
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Khufu:...
As in your previous comments regarding my situation, I thank you for your attempt to warn me of the pitfalls that many have fallen victim to through lack of planning and possible lack of fiscal discipline. I have always been an organized, regimented, and overly cautious planner who ( mostly) made out well in life because of it. This one took me by surprise. Luckily I only have myself to plan for, which takes some of the stress off of the situation. I will be taking the next few months to get myself as educated as I can regarding the "options", many of which you and a few others on here have suggested. Thank you....
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