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Wife needs some reassuring!
Old 07-21-2014, 08:17 AM   #1
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Wife needs some reassuring!

I stopped working a couple of years ago, and have recently persuaded my wife that she should too. However she is feeling a lot of anxiety about it, so am looking to you guys to tell her we are fine.

Here are the details:

I am 59, She is 52

Investments of $4.2 million, 75% equities, 25% bonds - most with Vanguard
half is in ira/401k accounts, half in normal accounts.

Expenses for the last three years have been between $60,000 and $70,000

Social Security estimates each of us will receive just over $2000 a month at 66

Expect small inheritance of around $500,000 in a couple of years

Wifes family often live to mid to late nineties, my family to their eighties

No children so any money left goes to charities

Health Care will be around 10,000 a year

Have run numbers through firecalc and am getting 100% success rates, however wife is still anxious

So this is just a check to make sure I am not missing anything and that we should be fine with her stopping work. Thanks in advance for your comments.
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Old 07-21-2014, 08:21 AM   #2
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Sometimes, most times, emotion and logic do not mix. You have more than enough for (almost) any contingency. It might be worth it (for emotional reasons for your DW) to hear it from a FA from a professional office. She might feel better reassured. Congratulations !! Rich
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Old 07-21-2014, 08:22 AM   #3
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Have you used Vanguard's financial planning services? With the amounts you have it would likely be free and an independent, professional evaluation may help put her mind at ease.

But you are right, it should be no sweat. Another thing to show her would be your Vanguard Financial Engines report.

To make it simple, even $100k a year withdrawals would only equate to a 2.3% WR which is very sustainable. I'm guessing that income (interest and dividends) on your investments for each of the last few years exceed your spending so that is another data point for her to consider.
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Old 07-21-2014, 08:24 AM   #4
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Seriously? Not only should you both be retired already, I would literally double my spending and enjoy the rest of my life with not a care in the world.
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Old 07-21-2014, 08:28 AM   #5
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Wow, your biggest problem looks to be how to ratchet up expenses, develop some expensive hobbies or figure out who you are going to leave all your excess wealth to.


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Old 07-21-2014, 08:43 AM   #6
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You are in superb shape
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Old 07-21-2014, 08:47 AM   #7
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Originally Posted by weshallsee123 View Post
I stopped working a couple of years ago, and have recently persuaded my wife that she should too. However she is feeling a lot of anxiety about it, so am looking to you guys to tell her we are fine....
Sometimes it just takes a while to get used to a big change in perspective like this. It has taken my wife several years, and even now she is only comfortable with "two years from now." I think you should just keep the low pressure conversations going until she sees for herself that you will be okay. Showing her portfolio growth and expense numbers for the last few years should help, but give her some time to digest them for herself.

Good luck.
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Old 07-21-2014, 08:51 AM   #8
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We have used their planning services while in accumulation mode, but not to talk about being in withdrawal mode and what that means in terms of amounts, so great idea! I have just scheduled an appointment with our flagship rep to go over that.

Also like the idea about the financial engines report - I will take her through that.
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Old 07-21-2014, 08:52 AM   #9
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Good idea, I have just scheduled an appointment with our vanguard flagship rep, hopefully she will believe him. Have asked that they show some potential withdrawal amounts.
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Old 07-21-2014, 09:00 AM   #10
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Is your wife good with numbers? For many people, these financial calculations are foggy. It might help to break it down in very simple terms.

If you assume wife lives to 100, just divide the $4.2M by 48 years, and you get $87,500 per year. That assumes the investments keep up with inflation, and ignores the effect of volatility, but it gives you an idea. By that measure, you are OK even before any SS.

That is just over 2% WR, which is very conservative to start. Plus SS and possible boost from inheritance. I'm not as quick as many to say this, but I think you are on very solid financial grounds.

But maybe your wife's concerns are not financial?

-ERD50
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Old 07-21-2014, 09:23 AM   #11
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I think her concerns are financial as she doesn't really enjoy her job and from that regard is looking forward to stopping. Her family did not have a lot of money when she was growing up and she often tells me she is scared of being poor.
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Old 07-21-2014, 09:48 AM   #12
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If her insecurity is financial, what she needs is a detailed and credible financial plan for the withdrawal phase, developed with input from both of you, by an independent expert, including best and worst case scenarios. This should prove without a doubt that retiring is a completely rational decision from a financial point if view. If that doesn't convince her, there must be other issues at play.
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Old 07-21-2014, 11:36 AM   #13
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It takes time for each individual to come to terms with when they "have enough" and feel ready to stop working. Most adults have been working for 30-40 years, so the change can feel quite shocking. I suspect financially she probably knows you have more than enough, but taking the step of retiring is something that everyone has to do at their own pace.

Perhaps a meeting with an FA might help, but I suspect anyone good who is not trying to sell you something with a big commission behind it will simply look at your numbers and ask you why you are living so conservatively with so much wealth saved up.

Give her some time and see what questions or concerns she may have about making the decision. I suspect she will come around when it feels right to her.
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Old 07-21-2014, 11:59 AM   #14
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I made a spread sheet and then we sat down with a Fidelity planner and he came up with the same basic numbers, so I knew mine were in the right ballpark.

It does seem a bit surreal to not have to work any more and have enough to retire early when everywhere around us are stories about people not saving enough for retirement and needing to work until 70.

I think we underspent for the first 3 years just because it took that long to sink in that the spreadsheet and Fidelity RIP were correct and we really didn't miss anything major, and we did put enough pad in the budget to allow for the few unplanned expenses that did crop up. Plus we had some pleasant surprises like the ACA making our health insurance premiums more affordable and our home value bouncing back from the depths of the housing bust.

The one downside to Fidelity is they kept telling us we needed 80% of our former income for retirement, which was absurd since we weren't spending that much for day to day living expenses even when we were working, especially after taxes and saving for retirement.
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Old 07-21-2014, 12:01 PM   #15
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Vanguard should help her a lot.

In this case it might also be beneficial to consider an annuity to cover your base expenses, with or without SS, just for the peace of mind. It looks like you could do that for a fraction of your portfolio.

I'm withdrawing more from a smaller portfolio, so I certainly vote with the retire now side.
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Old 07-21-2014, 12:13 PM   #16
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Originally Posted by weshallsee123 View Post
I think her concerns are financial as she doesn't really enjoy her job and from that regard is looking forward to stopping. Her family did not have a lot of money when she was growing up and she often tells me she is scared of being poor.
I can relate to that. I'm in the same ranges as you on everything except we are 50/48. DW is a homemaker and this year I plan to RE. Under the worst of historic conditions you'll not be poor given an appropriate AA. But you already knew that. Congrats!
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Old 07-21-2014, 07:56 PM   #17
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How about ratcheting down your asset allocation to 50/50 or at very least 60/40? That would enable me to sleep better at night in your scenario. Or an SPIA - as suggested earlier - but you are a little young for that yet. I would hate to see in excess of a million of that stash go up in a puff of smoke when we experience the next correction.

Just saying.

What would calm your DW's nerves, have you asked her?
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Old 08-13-2014, 05:51 AM   #18
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How about ratcheting down your asset allocation to 50/50 or at very least 60/40? That would enable me to sleep better at night in your scenario.
Exactly. She's more risk averse. Bill Bernstein's "Ages of the Investor" would say to take 30 years of liability matching portfolio off the table. Why play the game if you've already won? 60k x 30years = 1.8 million and perhaps that larger exposure to bonds would help calm her nerves. 1.8/4.2 = 42.8%
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Old 08-13-2014, 07:19 AM   #19
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What would calm your DW's nerves, have you asked her?
That's a good way to approach it. I just retired at 61 and am still a little edgy about having no wage income coming in (DH gets SS and I get $10K/year from a pension) and actually having to take money OUT of the investments. I realized that was going to be a source of anxiety no matter when I retired or how much we had. If her concerns are going to be the same no matter when she cuts the cord, she'll have to deal with them sooner or later.
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Old 08-13-2014, 12:48 PM   #20
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Exactly. She's more risk averse. Bill Bernstein's "Ages of the Investor" would say to take 30 years of liability matching portfolio off the table. Why play the game if you've already won? 60k x 30years = 1.8 million and perhaps that larger exposure to bonds would help calm her nerves. 1.8/4.2 = 42.8%
+1 on the won the game approach.
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