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Old 04-07-2012, 08:31 AM   #21
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I think Nords was tugging on your chain.
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Old 04-07-2012, 08:33 AM   #22
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Is SS factored into your 4%? In other words, is the withdrawal your living costs minus SS or is it just your living costs?


I am eligible for SS but I have NOT factored any SS in any of my calculation. I am not sure it will even be there when I become of eligible age. I am assuming I will receive zero dollars from SS and no Medicare, i.e., I have to buy health insurance or go to Bangkok to get medical treatments (after reading Khufu's thread--this is a distinct possibility) if I should need a knee or hip replacement or anything major.

I also want to wait until 2014 to see what the health insurance situation will be. I have no pre-existing condition right now. I have excellent health but should I be diagnosed of something, I really am concerned about the pre-existing condition issue w/ health insurance.
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Old 04-07-2012, 08:35 AM   #23
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I think Nords was tugging on your chain.

You are right! I should have known better! Of course, Nords was just messing w/ me.
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Old 04-07-2012, 08:38 AM   #24
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Thank you EVERYBODY. I love this Forum.
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Old 04-07-2012, 08:41 AM   #25
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Hi Michael,

You are correct with your math. That is what I've calculated as well. I need to increase my portfolio by a 1/3. I do not factor ANY investment returns in my calculation; the increase will come purely from savings. I have no mortgage and no car payment. I cook nutritious delicious meals at home for myself. My hobbies are inexpensive: yoga, and hiking w/ my dogs, and bicycling the many trails in and around Washington DC. Hence, I have a lot of money leftover each month to buy into more funds at Vanguard. I am assuming zero percent return from investments between now and 2014. That said, I also do not factor in any major market downturn between now and 2014 either. Thank you for your comment.
That's pretty good and a nice example of how to benefit from frugal living. Assume you have made some provision for unplanned expense?

As to the 4% vs 3% question, I say choose the one that works for you and lets you sleep well at night. Hope this works out, and yes, do keep us posted on your progress.
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Old 04-07-2012, 09:00 AM   #26
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I am eligible for SS but I have NOT factored any SS in any of my calculation. I am not sure it will even be there when I become of eligible age. I am assuming I will receive zero dollars from SS and no Medicare, i.e., I have to buy health insurance or go to Bangkok to get medical treatments (after reading Khufu's thread--this is a distinct possibility) if I should need a knee or hip replacement or anything major.

I also want to wait until 2014 to see what the health insurance situation will be. I have no pre-existing condition right now. I have excellent health but should I be diagnosed of something, I really am concerned about the pre-existing condition issue w/ health insurance.
I think assuming zero SS and Medicare is too conservative and the result will be that you end up retiring later than you could. Everything I have read indicates that those near or at SS age will receive most of what they are being told they will receive and any changes will most likely affect those currently younger than 50. Even if you put on a 30% haircut to the SS you would be due wouldn't that reduce your WR dramatically?

On the health care front, have you checked into what a policy would be in the state where you plan to be retired? And then there is always COBRA for the first 18 months but in my case private insurance (in a state with no pre-existing conditions limitations) was about 1/3 less than my COBRA.
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Old 04-07-2012, 10:52 AM   #27
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That's pretty good and a nice example of how to benefit from frugal living. Assume you have made some provision for unplanned expense?

As to the 4% vs 3% question, I say choose the one that works for you and lets you sleep well at night. Hope this works out, and yes, do keep us posted on your progress.
Hi Michael,

I included $1200 for annual car repairs and $2000 for house repairs. There is also a $5284 annual for anything else that is unforeseen. I budget health insurance at the highest possible cost for my state though I think it will actually cost me less because I will choose the highest deductible. I hope that I have been adequately conservative in my budget. Plan A is to ER in place, no downsizing.

If something bad should happen during ER, my Plan B is to rent my house out for rental income and to move to a lower cost of living area. My next door neighbor with an identical house and yard to mine rents his for $4200 a month. The rental market in my area is very strong. My house is located in one of the most desirable school districts. So with rental in come of at least $3,000 a month if I rent out my home I can find a place to live for less and have a some income left over for other expenses. I hope this will all work. Like many others have expressed on this Forum, I am afraid I may have missed something really significant in my planning.

I am going to go over my plan again and again and recheck all my spreadsheets as well as consulting FIRECALC before pulling the plug.
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Old 04-07-2012, 11:35 AM   #28
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I think assuming zero SS and Medicare is too conservative and the result will be that you end up retiring later than you could. Everything I have read indicates that those near or at SS age will receive most of what they are being told they will receive and any changes will most likely affect those currently younger than 50. Even if you put on a 30% haircut to the SS you would be due wouldn't that reduce your WR dramatically?
No argument. I didn't include Soc Sec just as a margin of safety towards my probability of success, not that I don't believe we'll get any benefit from Soc Sec. I know of several others who weren't comfortable retiring until they could get their WR well below 3%. Overkill most likely, just what it took to sleep well at night when pulling the plug.
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Old 04-07-2012, 11:38 AM   #29
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I think assuming zero SS and Medicare is too conservative and the result will be that you end up retiring later than you could. Everything I have read indicates that those near or at SS age will receive most of what they are being told they will receive and any changes will most likely affect those currently younger than 50. Even if you put on a 30% haircut to the SS you would be due wouldn't that reduce your WR dramatically?

On the health care front, have you checked into what a policy would be in the state where you plan to be retired? And then there is always COBRA for the first 18 months but in my case private insurance (in a state with no pre-existing conditions limitations) was about 1/3 less than my COBRA.
Good points all.
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Old 04-07-2012, 11:45 AM   #30
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2014, not trying to go out on a tangent here, but $2000 per year to maintain a house that might rent for $3000-4200 per month seems a little light. Would you mind telling us the age of the house?
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Old 04-07-2012, 02:16 PM   #31
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Hi Nords,
Were you really being serious about quarterly update of thoughts on the "2 to 3 more years?" I would be happy to but 2 to 3 more years is such a long time that I worry I'd be a nuisance to Forum members if I provide update quarterly. I think there are many on this Forum who are living in the 2-to-3-more-years mode.
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I think Nords was tugging on your chain.
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You are right! I should have known better! Of course, Nords was just messing w/ me.
Sorry, guys, but I really am serious.

I swapped e-mail with one member of this forum for much longer than that, watching and learning as their mindset changed. You might say I got most of a book out of the process.

I think monthly is too often for a status update, and it's tempting to try to find something to say when you really don't have any change to report. In the same way semi-annually or annually is too infrequent to track the attitude change.

I think it'd be very instructive for forum members to be able to see this thread continue for a few more years. The worst that'll happen is you'll end it feeling the same way you started it. Or, as has been predicted by other posters, your BS bucket will quickly fill to overflowing and you'll declare that a conservatively-planned 3.99% SWR is better than sticking around for a couple more years and a 3% SWR.

For all you know, Retire2014, the moderators and other posters might be running private betting pools on what day you actually decide to retire. I'll set your mind at ease by declaring that I'm not one of them.
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Old 04-07-2012, 03:32 PM   #32
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Sorry, guys, but I really am serious....
I stand corrected.
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Old 04-08-2012, 12:52 AM   #33
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Sorry, guys, but I really am serious.

I swapped e-mail with one member of this forum for much longer than that, watching and learning as their mindset changed. You might say I got most of a book out of the process.

I think monthly is too often for a status update, and it's tempting to try to find something to say when you really don't have any change to report. In the same way semi-annually or annually is too infrequent to track the attitude change.

I think it'd be very instructive for forum members to be able to see this thread continue for a few more years. The worst that'll happen is you'll end it feeling the same way you started it. Or, as has been predicted by other posters, your BS bucket will quickly fill to overflowing and you'll declare that a conservatively-planned 3.99% SWR is better than sticking around for a couple more years and a 3% SWR.

For all you know, Retire2014, the moderators and other posters might be running private betting pools on what day you actually decide to retire. I'll set your mind at ease by declaring that I'm not one of them.
Shucks, I probably would have obliged you, but I'm out now as of a couple of months ago.

At the end there, my bucket was so close to full that I started up my own kaiser health plan as a mega BS project was starting up that I was going to get wrangled into doing. I wanted to have the plan in place before i gave notice.

All of a sudden, a small fun project came up that interrupted the mega BS project, so I stayed on an extra few months. It also let me pack some money into the 401k in 2012. After that, the mega BS project came back on the radar and it was so long at that point.
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Old 04-08-2012, 02:30 PM   #34
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2014, not trying to go out on a tangent here, but $2000 per year to maintain a house that might rent for $3000-4200 per month seems a little light. Would you mind telling us the age of the house?

Hi Rustward, Yes on the surface $2000 annual budget for house repairs seems light for a home that could rent for $3 to 4.2K/month. The reason I budget it this low is because in the last 3 years in preparing for ER, I have put in all NEW and done MAJOR RENOVATIONS on everything. Here's what I've done:

1) new roof (25 year warranty)
2) new AC/Furnace (10 year warranty)
3) new refrigerator, stove, dishwasher, clothes washer and dryer
4) hot water heater
5) relandscaping ground and put in exterior French drain to ensure dry basement (this really works by the way---very dry basement last Spring when Fairfax County was flooded )
6) all bathrooms and kitchen completely renovated floor to ceiling including everything new in it from toilet to shower head, etc.
7) new electrical mother board (whatever that means to meet code)
8) new gutter and downspouts
9) complete finishing of basement w/ recessed lighting in ceiling and user-friendly tile floor, etc.

I am sure I may have forgotten some stuff but my neighbors said it's practically a brand new house. But the age of the home is old. It was built in 1964 and it has 2800 square feet of finished living space, 5 bedrooms. Last year, I tried to sell it to downsize to ER but I really did not need to sell so I did not want to have to compete with foreclosures etc. that were flooding the real estate market.

As a safety factor, retiring in place, although expensive due to property tax ($4800 per year), provides a margin of error in the event I need to return to work as a consultant in finance/audit etc; I have many professional contacts in the area and thus will have a better chance of landing parttime/temporary gigs in the years when the Market is taking a dive.

10 years from now, starting in 2022, I will change the annual budget house repairs to $6000. But for the next 10 years, nearly everything is still under warranty so I thinkg $2000 annually may be more realistic. Fairfax County is where my home is located and the rental market for it has always been stronger than many other areas.

Thank you for sharing your thoughts. I, too, would think $2000 is light if it were not for the fact that I've just put in all those home improvements.
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Old 04-08-2012, 02:31 PM   #35
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Sorry, guys, but I really am serious.

I swapped e-mail with one member of this forum for much longer than that, watching and learning as their mindset changed. You might say I got most of a book out of the process.

I think monthly is too often for a status update, and it's tempting to try to find something to say when you really don't have any change to report. In the same way semi-annually or annually is too infrequent to track the attitude change.

I think it'd be very instructive for forum members to be able to see this thread continue for a few more years. The worst that'll happen is you'll end it feeling the same way you started it. Or, as has been predicted by other posters, your BS bucket will quickly fill to overflowing and you'll declare that a conservatively-planned 3.99% SWR is better than sticking around for a couple more years and a 3% SWR.

For all you know, Retire2014, the moderators and other posters might be running private betting pools on what day you actually decide to retire. I'll set your mind at ease by declaring that I'm not one of them.

Hello Nords,

Hahaha. Ask and you shall receive. I will update quarterly. If it gets boring to certain members, they can always ignore thread.
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Old 04-08-2012, 03:54 PM   #36
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Congratulations on reaching the 4% benchmark!! I respect your plan to try to reach the more conservative ~3% SWD level. Based on my experience, you will sleep better knowing there is a wider margin of safety in your plan.

In my case, I cut my expenses down to a 2.5% level to begin my ER, especially given the uncertainty of the economy, federal debt load, and unpredictable health insurance outlook. I also am NOT figuring in my SS benefit and modest pension for the time being. If I can live happily and comfortably without them, then so much the better.

I like the added peace of mind that comes with a having a few circuit breakers built into the system.
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Old 04-08-2012, 04:03 PM   #37
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You may be overlooking an important variable.

4% is the classic safe WR based on a 30 year retirement. At 65, 4% is indeed considered safe. At 55, most would consider 4% WR pretty aggressive, lower probability of success. Many consider a 3-3.3% WR indefinitely sustainable, IOW you could retire at almost any age unless the future is markedly worse (real returns) than the past...

Given the OPs age target, I'd say it would be wise to shoot for 3% or so. YMMV
My point was that since OPs house and cars are paid off, he would have a much easier time retiring now at 4% withdrawal rate and then cutting back on expenses if the market didn't cooperate than someone else would if their 4% withdrawals were including having to pay a mortgage payment. Surely, his 4% includes lots more fat in his budget than the avg person if it doesn't include housing.
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Old 04-08-2012, 10:11 PM   #38
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Congrats Retire2014! That's great.
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