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A little bit of affirmation on my ER plans.
Old 02-18-2013, 11:53 AM   #1
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A little bit of affirmation on my ER plans.

I'm 51... plan is to retire at 55 - or sooner if I get offered a severance package (which there are decent odds of when our acquisition completes later this year.) Firecalc, Quicken Lifetime Planner, Fidelity, Financial Engines... all say we're there, 100%, now... but there's not a lot of wiggle room or padding in our numbers. For example, I input the full SS (based on proposed earnings ending at years x, y, and z...) rather than partial like a lot of people do... so that's a risk factor I'd like to save more for. I see that some people don't retire till their numbers work even without SS. I'm counting on SS as one of the legs on my 3 legged stool.

We got together with folks from my husband's former job.

My husband's former boss went grudgingly into retirement at age 70. Basically the recession hurt his business (architecture) to where it was costing too much to keep the doors open. He'd still be working if that hadn't happened.

His wife is in the same field as me (embedded software) and we've always had a good rapport. I told her, several years ago that I was pushing for early retirement. She was highly skeptical - instead encouraging me to kick my career into overdrive and get into upper management. But... she retired (at 62) a month ago. We saw them this weekend. The first thing out of her mouth was DO IT!!!! RETIRE!!!! I WAS WRONG!!!! She can't believe she waited to retire, and really can't believe her husband waited. To say she loves retirement is a big understatement.

My sister and I have had long talks about my desire to early retire. She's always expressed skepticism and a bit of negative judgement about it. She must have had an epiphany - because she sent me an email this weekend saying she's been thinking about it a lot - and agrees that I should retire as soon as feasibly possible.

My sister is thinking about the fact that my goal is to be a full time SAHM for my pre-teen kids. But my plans also have to do with my BS bucket being full.

It's nice to get two affirmation of my plans in less than 24 hours.

Just have to keep working the plan. Our goal is to have the house paid for by Q1 next year. More savings banked. And hopefully know if the healthcare law changes of 2014 will hurt or help our budget.
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Old 02-18-2013, 12:24 PM   #2
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His wife is in the same field as me (embedded software) and we've always had a good rapport. I told her, several years ago that I was pushing for early retirement. She was highly skeptical - instead encouraging me to kick my career into overdrive and get into upper management. But... she retired (at 62) a month ago. We saw them this weekend. The first thing out of her mouth was DO IT!!!! RETIRE!!!! I WAS WRONG!!!! She can't believe she waited to retire, and really can't believe her husband waited. To say she loves retirement is a big understatement.
I can relate to that! I knew I wanted to retire (after all, my original username here was Want2Retire). But, I never realized how much I would like it.

It is so wonderful to go for days, weeks, months, without seeing anybody back-stabbing anybody or engaging in what is so euphemistically called "office politics". Even when I wasn't the target, I thought that was so stressful and miserable to see on a daily basis. Now, when I work a little bit around the house, for example, to accomplish something, the fruits of that work are mine to enjoy no matter how minor they may be.

Maybe the best part is the freedom of being in charge of my own life and what I do on any particular day.
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Old 02-18-2013, 12:43 PM   #3
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I recommend having some head-room over and above your historical expenses (or estimated post-retirement expenses). How confident are you in your expense estimates?

How much headroom? For us, it was about 12% at ER. That proved wise since we ER'd right into the 08-09 downturn. Our portfolio has recovered, but our reduced expenses (we now live comfortably on less than we had forecast) and some earnings have helped. We also moved to a lower cost area that we love.
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Old 02-18-2013, 12:44 PM   #4
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Hi Rodi. I hear ya on the risks ! I keep adding risks so that it looks too close and down right scary to retire right now. For example, although I have 6k / year in my budget for home mainteance and one time expenses (car replacement etc) I wonder if its enough, even tho I have 300k set aside to cover such things. I wonder if 5k per year vacation expense is going to be enough to satisfy me even tho I've spent less than half of that the past 3 years. I wonder if using social security at 65% is enough ... should I knock it down to 50%. I keep expecting the market to take a hit, so I only use 90% of my portfolio (and would feel much better if I could only use 75 or 80%). And then --- best of all --- I wonder if I'm actually a little overconfident in my hope of retiringing this year because I feel my "contingencies" are way too conservative !!

Every calculator I've run says that I have a 90% chance of my money lasting until I'm at least 87. I could probably life just on Social Security alone at that point but I'm sure I'd see the writing on the wall by time I'm 70 and buy longevity insurance or a SPIA by that point if it looked like I'd be broke sooner than expected.

Its so easy to talk ourselves out of retiring because it really is a one way decision. Voluntarily giving up a job that is likely to be at our peak pay is HARD and scary.

It must be great to have that affirmation. And it must be great to see that 100% success rate ! I'd say it looks like you're in good shape and that you need not worry, even if you left today.
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Old 02-18-2013, 01:11 PM   #5
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I'm confident in our budget *except* for health care. I'm confident because it's our current budget, with $12k added for healthcare (family of four). That's a few hundred a month more than the cobra rate less my current premiums.

I've got the 529 contributions funded through the boys' early 20's. So that's accounted for in my budget. I should be on track - even with a higher rate of inflation for college, to put them through a CSU or UC public school. Fortunately, California has good public schools. (Berkeley anyone?)

I didn't completely eliminate after school/dependent care costs - the boys will still get some fun camps in the summer... but not full time like when I'm working. I can take them to the beach myself at that point vs paying for surf and sailing camps.

My budget is based on the last 3 years of spending, less retirement savings and mortgage payments. (We don't escrow so my budget does include insurance/prop tax.) It includes travel. It includes fun.

I'm confident about the budget - probably have some head room. Only wild card in the budget is healthcare... and that's true for all of us sub medicare folks without retiree healthcare.

Like I said - I'll keep working till 55 - just to mitigate risk. But Firecalc says 100% till age 95 now...

I'm nervous about market downturns... so I'd like to pad it some more... Unless they offer me the severance package I'm wishing for... That will make the decision EASY.
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Old 02-18-2013, 02:07 PM   #6
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Does your budget include sufficient provisions for periodic car replacements and major house repairs (new roof, furnace/AC or whatever)? Just want to ask to make sure you have that covered off.

I do that by providing auto 'depreciation' in my budget which should be sufficient to provide replacements every now and then (though we tend to drive cars into the ground) and we demolished and rebuilt our home before retiring so there shouldn't be any major repairs needed anytime soon.
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Old 02-18-2013, 02:11 PM   #7
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Unless they offer me the severance package I'm wishing for... That will make the decision EASY.
Sounds like my dad. He was set to retire at 55 (as soon as he was eligible for a pension and subsidized retiree health insurance), but then his bosses made his work a lot more pleasant; effectively, his bosses regularly and frequently "emptied" his BS buckets so he wouldn't retire. With the BS bucket not being filled, he decided to stay for a while longer.

He said his job was never more pleasant than when both he and his bosses knew he could retire. (This shows the power of FI with *or* without ER.) But a little before he turned 58, he got an early retirement incentive offer he couldn't pass on -- as I recall, he got an extra 5 years of service for calculating his pension, six months salary as a lump sum and (the Holy Grail) 100% employer-paid health insurance until age 65. (This, of course, is a carrot that probably no one will ever be offered again.)

I think it took him about 2 1/2 seconds to make up his mind and get with the HR folks to sign up for it....
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Old 02-18-2013, 03:15 PM   #8
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Does your budget include sufficient provisions for periodic car replacements and major house repairs (new roof, furnace/AC or whatever)? Just want to ask to make sure you have that covered off.

I do that by providing auto 'depreciation' in my budget which should be sufficient to provide replacements every now and then (though we tend to drive cars into the ground) and we demolished and rebuilt our home before retiring so there shouldn't be any major repairs needed anytime soon.
Yes - covered both. We've been getting the house in shape over the past few years - so our spending is based on high ticket spending (new windows, new kitchen remodel, etc.) Our budget reflects those higher spend levels which are NOT normal. That's to be safe.

As far as cars - we have always put aside $300/month towards car fund. Even though we drive paid for semi- beaters. My husband's truck is a 95, and still going strong... my car is 8 years old and still going strong. We've got enough money set aside to replace both.

Our travel budget might be a little underfunded for the "want" (vs need). As mentioned - we based our budget on current spending... and we've only done one international trip in the past 3 years... we'd want to do more, maybe even one per year... But we have traveled/vacationed every year - so that is in our budget... and travel is definitely a more discretionary budget item. Plus - we currently travel as a family of 4 - which is a lot more expensive than travel will be 10 years from now when the kids are launched and we're only buying airfare for 2.
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Old 02-18-2013, 03:19 PM   #9
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Sounds good. So what you waiting for?
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Old 02-18-2013, 03:25 PM   #10
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Sounds good. So what you waiting for?
As I said - the health care unknowns and seeing what happens to SS.
I'm too close to the edge for comfort with those.

But if I were laid off today - I'd walk away with a grin on my face fairly confident we'd be fine.

In 3.5 years - I won't even need the push of being laid off... the cushion will be plenty big.

I guess the next big pivot/decision point is next jan. Hubby turns 62 and plans to retire. We'll have the mortgage paid off. I may just join him.
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Old 02-18-2013, 03:51 PM   #11
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Been there. I was hoping to get down-sized and pick up a severance package at about 55. Unfortunately, it didn't happen for me.

If FireCalc is giving you 100%, I'd say that's a cushion. I expect their average line is showing your assets increasing.

"embedded software" sounds like it has part time possibilities. Maybe you're currently management and have to be full time for this job, but have you thought about some part time arrangement?

And, in my early 50's, I would have felt that going back to work was an acceptable cushion for nearer term deviations.
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Old 02-18-2013, 06:06 PM   #12
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I would wait also.
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As I said - the health care unknowns and seeing what happens to SS.
I'm too close to the edge for comfort with those.
.
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Old 02-18-2013, 06:06 PM   #13
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As I said - the health care unknowns and seeing what happens to SS.
I'm too close to the edge for comfort with those.

But if I were laid off today - I'd walk away with a grin on my face fairly confident we'd be fine.

In 3.5 years - I won't even need the push of being laid off... the cushion will be plenty big.

I guess the next big pivot/decision point is next jan. Hubby turns 62 and plans to retire. We'll have the mortgage paid off. I may just join him.
I think you've got a great plan with a lot of different triggers to start ER.

While healthcare costs are a big unknown, their rate of increase has been coming down over the past few years. Also the PPACA will help if you have a pre-existing condition. Go to ehealthinsurance.com to get some quotes though be aware that those quotes assume no pre-existing conditions. Call an insurance agent and see what they say. Their services do not increase your premiums.

All the best.
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Old 02-18-2013, 06:52 PM   #14
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Been there. I was hoping to get down-sized and pick up a severance package at about 55. Unfortunately, it didn't happen for me.
Me neither. In my case a surprise acquisition related buyout came, but I wasn't allowed on the bus, and I got the hint that I would never be allowed on any bus, including layoff severance. I could retire on the job, but that would stress me out more than either giving it my best or officially retiring, and since there's no upside with the former (a point that was also made clear to me), I chose the latter. I don't believe I was gamed into quitting for free because only a tiny fraction of buyout applicants were rejected. Maybe management doesn't believe I'm FI without the package? Anyway you may want to make adjustments now to position yourself appropriately in case there's any doubt.
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