(Worry Emoticon) Retirement May be Sooner Than Planned

[webdweeb]

Hi, I'm a newbie to this forum but not to retirement planning-I've been obsessed with the topic since my 20s (which seems like an eternity ago), which I hope will pay off for me now. My company is beginning to downsize (a direct result of the current and upcoming defense budget cuts), and given my age (mid 50s) it is unlikely that I will easily find a job (any job, let alone one that pays what I am now earning), so I am firing (no pun intended) up the retirement calculators to see how much pain I have to inflict on our current lifestyle if the worst case happens. I've already checked out the Firecalc web calculators and have been following the Retire Early web site for some time (and py]laying with the numerous excellent spreadsheet calculators available there), but now that the reality of the situation is hitting me, it definitely impacts the way I think about the numbers that go into the calculators-before it was more of an engineering or probabilistic exercise, but now my future (and that of my wife and children) are dependent on the accuracy of the predictions that I generate to determine how much to withdraw, how much our future expenses will be, when to tap into pensions and SS, what to assume for inflation rates, taxes, annual yields, etc, etc, etc, etc-my head is hurting just typing about it!

From reading the forum threads, it seems like there are a lot of kindred spirits here that are in the same boat as myself (or at least in the same harbor), so I am looking forward to participating in the forum. Thanks for spending the time to read my post, and I look forward to lots of stimulating interactions on the forum.

 

[obgyn65]

Welcome to the forum.

 

[MichaelB]

Welcome, webdweeb. It's good you have begun using FIRECalc, but feel free to ask questions and search past threads to look over the past discussions. Many here have been through circumstances similar to the ones you describe so there is lots of experience to learn from and observe.

 

[East Texas]

I also played with the numbers and did a lot of retirement scenarios; but the most simple solution (for me) was to live on my perceived retirement income for several years before retirement.

 

[pb4uski]

Welcome webdweeb. I recently ER'd and ran my situation through a number of calculators. While they did vary and there were a couple outliers, most were in the same ballpark which gave me some comfort.

My baseline projection is using Quicken's lifetime planner which I think is pretty comprehensive and flexible even though it is deterministic so it is bound by the investment earnings assumption. However, between lifetime planner, Firecalc, Financial Engines, OMP and some others I ultimately became comfortable enough with the results to pull the trigger.

 

[KiraC]

Welcome!

When I lost my job last year (after just turning 50), I came across a great quote 'there are no endings, only new beginnings.' I'll admit the change was frightening but my life is so much better now.

 

[Live And Learn]

Welcome !

I would bet that your 30 years of 'obsession' will pay off.

I've been playing with retirement calculators for the past 20 years, and now am seriously considering ER next year. I hear you - planning 'for real' is alot different than the analyses we were doing before ! Where I used to say "hey - only a 25% chance of portfolio depletion by age 85 ! thats GREAT !!!" I now say "crud - there's a 25% chance that my portfolio will be depleted by the time I'm 90 - I'm worried about that".

As mentioned above, having some sort of consensus between a couple of calculators gives some comfort. I'm also finding that forward looking (monte carlo type) of calculators are much more conservative than the backward looking (like FireCalc).

Lots of good threads on this forum and everyone is very helpful.

 

[webdweeb]

Thank you for all the kind words-I am clearly in the right place. I'm certain that I will have lots of questions once I get to the point that I "know what I don't know". One area in particular I will probably need help with is projecting the cost of health care, especially for Medigap insurance and HIPAA conversion policies in the event I retire before I am eligible for Medicare. Still lots of reading to do, so I will be back soon with more specific questions. Thanks again!

 

[H2ODude]

I think the most significant feature of the calculators is that...they're all likely to be wrong! As in the best you can do is to generate a range of expected results. You probably can do a pretty good job of nailing expected expense, but as the Firecalc graphs so vividly depict, there's no such thing as certainty when it comes to predicting financial results. So you can either assume the most dire conservative forecast and budget around that or go up from there and have a plan...in case. But I think the important thing is to build some flexibility in to your plan. Good luck and welcome!

 

[travelover]

Welcome. My best advice is to quit worrying about what anyone else might think and do what you need to do to make it work for you and your family.

For me, a lot of the "necessary" expenses I was incurring were just bad habits developed over years of fitting in with my peers.

One can live pretty cheaply and well with the right attitude.

 

[Major Tom]

Welcome. My best advise is to quit worrying about what anyone else might think and do what you need to do to make it work for you and your family.

For me, a lot of the "necessary" expenses I was incurring were just bad habits developed over years of fitting in with my peers.

One can live pretty cheaply and well with the right attitude.

I think this is very good advice for Webdweeb. Although he's posted no specifics, the fact that he is a family man and a self-described obsessive who has been thinking about retirement for decades, seems to suggest that all he needs are some good resources which he can use to make the best decisions for his family.

Two things - welcome to the forum, and apologies for talking about you in the third person!

 

[webdweeb]

Here is my current stream of consciousness on our future (in no particular order, by definition):

- comfort zone as to the Firecalc success percentage we can live with (is xx% too risky, etc)

- projections of discretionary expenses for the first 10 years, when we plan to do most of our expensive traveling (mainly Europe) while we are still healthy (leaving the US we haven't seen yet for later, when we presumably have less money and tolerance for 12 hour nonstop flights)

- how to plan for the ongoing "launch" expenses of our two adult children (how much, end date for the expenses, probability of boomeranging, etc)

- projecting future OOP medical expenses (crystal ball time, I guess)

- what I want to do with myself after I stop working at my present employer-career change, consulting, professional traveler, etc., and how that desire lines up with what my SO wants to do with herself

- assistance to my parents (seem to be financially secure, but still haven't "seen the books")

- Strategies for adjusting my spendthrift ways (all those hobbies cost money)

Feel free to comment on any or none of these-it was helpful to me just to make the list, kinda like a cheat sheet for a test.

Now that I've looked around here a bit more, I feel better about having sufficient tools for calculating and projecting our future plan-besides, it's always the decisions that precede the data to be used in these calculations that are the hardest part.

 

[Live And Learn]

I struggle with the "is XX% too risky" quota also. A couple of life longevity calculators say on average I will live to be 87 (37 more years) so I'm ok with a 10% failure rate at 87 and 20% at 95. I think I'll be able to live on SS alone once Ireach 87 - can't imagine I'll be doing much but watching TV, reading on the internet, and sitting by the community pool by then - shouldn't be too expensive.

I'm seriously considering buying LTC insurance but haven't yet. Its EXPENSIVE - at 49 and 53 the quote I have for $250/day is $7k per year for the rest of our lives.

I think there is a sticky in the "FAQs" about Medical Insurance. Also ALOT of threads on the subject. Head spinning stuff for sure !

 

[webdweeb]

An interesting aspect of this assessment is the drawdown period, ie, the time gap between when we would retire/stop working and when we would draw on my/my wife's SS and pensions, which for me is a max of 10 years (ie, now until my full SS retirement age) and a minimum of 4 years (I don't have any plans to stay in my present job past 62 assuming of course that it exists for that long) and for my SO is 4-6 years. I can come up with a (deterministic) solution where SS+pensions are sufficient to cover all of our expenses (including periodic ones and selected "big ticket items like a new car or new roof), so that seems to imply that I can do a gap analysis for the time span between stop work and start SS/pension, which gives me a lot more wiggle room relative to the expenses for those years as well as the amount of residual funds available for emergencies, big ticket items, family legacy, etc.. In particular, the possibility of major medical bills after we become dependent on just our pensions is something that I would want to address in the form of this reserve fund, which would also serve as the source of funds in the event my projection assumptions are off the mark.

BTW, one thing I did a few years ago to help manage our future expenses was to install a solar PV system-we now have an electrical bill of a few dollars a month, which is the admin fees charged by our utility. Even factoring in the maintenance costs (new inverter in about 15 years, replace panels starting in 25 years), the savings on monthly expenses in dramatic (bill had been running $200/month on average). With the recent tax credits, I will amortize the cost of the system in 4 more years, so the utility bill savings after that is almost like free money. Since electricity was our biggest utility bill by a large factor, this will hopefully help during the "golden" years when we can least afford to deal with a rate increase.

 

[Nords]

Even factoring in the maintenance costs (new inverter in about 15 years, replace panels starting in 25 years),

I bet you find that neither of those is necessary, any more than it's necessary to replace a vehicle that's going over 100,000 miles.

What's more likely to happen is that you'll be remodeling or repairing or replacing the roof, and you'll get sidetracked by cool new mounting systems or high-efficiency panels or an inverter that runs its own website.

 

[webdweeb]

I bet you find that neither of those is necessary, any more than it's necessary to replace a vehicle that's going over 100,000 miles.

What's more likely to happen is that you'll be remodeling or repairing or replacing the roof, and you'll get sidetracked by cool new mounting systems or high-efficiency panels or an inverter that runs its own website.

Nords, you correct, of course-my expense projection is worst case, but that's because I am an engineer and am used to worst case scenarios as the initial assessment basis. I did discuss this with my solar PV company, and they told me that I shouldn't have to worry about the panels for a long time-they are designed to output 80% of rated power at 25 years, and the inverter typically doesn't fail at the warranted 15 year mark but lasts many more years.

 

[webdweeb]

Well, I've decided after long discussions with my spouse and children and additional analyses that it is "time", so I will be spending the next week or so taking care of my affairs at work and saying my last goodbyes. My spouse plans to continue working (she is a few years younger than me and has a job she likes more than I like mine), so some of the discussion centered around how that change would affect our daily lives. The layoff process sounds pretty unpleasant (layoff notice given the same day as the last day of work, security escorts you to the door), so if I am on "the list" I want to leave on as close to my own terms as possible, which really means I want to not have to fumble about gathering up my personal effects at a moment's notice. If I manage to survive this wave of layoffs, I still plan to leave-for me, this was a situation that forced me to take a hard look at what I wanted out of life and how I wanted to spend my time between now and the end, and the prospect of continuing in my current job was not very appealing, especially when compared to the other possibilities. I had not seriously considered any of this until recently, but my recent analyses changed that-the data was the same as the last time I did it a few months ago, but my perspective on that data has changed dramatically since then. Anyway, thanks to all for your support, and I'll switch over to the other forums so I can participate in the more specific discussions found there.

 

[MichaelB]

Thanks for the update and good luck.

 

[East Texas]

I didn't see any mention of a "package" for displaced employees. Is there one?

 

[webdweeb]

The "package", such that it is, is pretty minimal-medical and basic (company paid) life insurance continues for 2 months, but dental and vision end at the end of the layoff month (which in this case is 31 March) and everything else ends the day of the layoff (which the employee determines on that day when the security guards show up at his office door). There is also a severance package, but the guidance for determining the amount is so confusing that I can't figure out what, if anything, I would get for that, so I am assuming that it is zero and will be pleasantly surprised if it is anything more than that. It would be great if someone was actually available to answer questions about all of this, but there is effectively an information blackout between management and employees until the actual layoff date, and at that time each employee will be informed of his/her actual layoff benefits and other key information (right before they are escorted to the exit). I was laid off from another aerospace company many years ago (seems to be a frequent occurrence in this industry-maybe I should have taken the hint then and moved on), and their process was much clearer and more humane as well as offering much more generous benefits, but that was then, and this is now. I have to admit that the way this company is handling all of this has really soured me on the company in general, to the point that I decided to leave even if I somehow survived the first round of layoffs. I will leave anyway since I can afford to do so, but I feel lucky-there are others that are not as fortunate and will have some significant hardships as a result of the layoff, but unfortunately it will be exacerbated by the manner in which the layoff is conducted.

 

[FreeAtLast]

Good luck with you retirement.

My job came to an end about 6 months ago and I went right into retirement. I am 59 and did not want to undertake another job search.
I had been semi retired for several years and had started living on my retirement income and banking most of my paycheck into savings as I could see the job coming to an end.

So far things are working out OK.

 

[Finance Dave]

Hi, I'm a newbie to this forum but not to retirement planning-I've been obsessed with the topic since my 20s (which seems like an eternity ago), which I hope will pay off for me now. My company is beginning to downsize (a direct result of the current and upcoming defense budget cuts), and given my age (mid 50s) it is unlikely that I will easily find a job (any job, let alone one that pays what I am now earning), so I am firing (no pun intended) up the retirement calculators to see how much pain I have to inflict on our current lifestyle if the worst case happens. I've already checked out the Firecalc web calculators and have been following the Retire Early web site for some time (and py]laying with the numerous excellent spreadsheet calculators available there), but now that the reality of the situation is hitting me, it definitely impacts the way I think about the numbers that go into the calculators-before it was more of an engineering or probabilistic exercise, but now my future (and that of my wife and children) are dependent on the accuracy of the predictions that I generate to determine how much to withdraw, how much our future expenses will be, when to tap into pensions and SS, what to assume for inflation rates, taxes, annual yields, etc, etc, etc, etc-my head is hurting just typing about it!

From reading the forum threads, it seems like there are a lot of kindred spirits here that are in the same boat as myself (or at least in the same harbor), so I am looking forward to participating in the forum. Thanks for spending the time to read my post, and I look forward to lots of stimulating interactions on the forum.

Welcome to the forum web!

I sense from the bold above a bit of negativity, perhaps you're a bit down about what's going on. But rather than focusing on the negative aspect of your "age", why not focus on the positive aspect of your experience, wisdom, and knowledge that comes with your career! Be optimistic, and you may just find that next j*b, even if only for a few short years.

Good luck.

 

[BigNick]

One area in particular I will probably need help with is projecting the cost of health care

I sometimes think that this board could close down completely if the US had a decent universal healthcare system.

- projections of discretionary expenses for the first 10 years, when we plan to do most of our expensive traveling (mainly Europe) while we are still healthy (leaving the US we haven't seen yet for later, when we presumably have less money and tolerance for 12 hour nonstop flights)

You could maybe consider home exchange (eg, Intervac Home Exchange - The original home exchange holiday service) as a way to have European vacations at greatly reduced cost (and a better experience than hotel life). Many European families would love to come to your part of the US for three or four weeks, almost regardless of which part of the US that is.

I will leave anyway since I can afford to do so, but I feel lucky-there are others that are not as fortunate and will have some significant hardships as a result of the layoff, but unfortunately it will be exacerbated by the manner in which the layoff is conducted.

Try to avoid burning too many bridges - if they get a big contract and need people in a hurry, you may be able to name your price for some consultancy.

 

[JBmadera]

Welcome to the forum web!

I sense from the bold above a bit of negativity, perhaps you're a bit down about what's going on. But rather than focusing on the negative aspect of your "age", why not focus on the positive aspect of your experience, wisdom, and knowledge that comes with your career! Be optimistic, and you may just find that next j*b, even if only for a few short years.

Good luck.

Funny story, at least to me: After I was laid off I sat in on one of the outplacement services webinars, something like "how to find work after 50", anyway it was a two day thing, focused on all the great benefits us older workers can provide, however during the wrap up the facilitator spent the entire time coaching us on how to "look" younger - everything from appearance to resume, language and social media. All of us participants left feeling pretty down.....

I know that having 30 years of experience can mean a lot but when employers have the choice of hiring a 30-35 year old or a 50+ guy seems like the 30+ wins most of the time (at least that has been my experience).

Hope things work out for you.

 

[Live And Learn]

Congratulations on your decision ! it must be very freeing to know that you're ready to go whether they want you to or not. Hang in there, if they do lay you off the severance package and unemployment insurance would be a bonus !