Am I on track to retire ??

[rdjrn]

I am 52 with plans to retire at 59-1/2. and currently have a 401K worth $500K. I also have a company pension that should be worth around 400K Lump sum when I go, plus a very good company health plan that will cover me and my family until medicare kicks in at 65. In addition I receive a monthly tax free disability check from uncle sam for $1300. And finally, I will begin receiving my Army Reserve retirement check at age 60 ($700/Month).

I am married with four kids (aged 14, 12, 9 and 8). I owe about $38,000 on my house which should be completely paid for by the time I reach age 59.

I need some expert opinions here,.....am I on track to retire at 59-1/2?

 

[nun]

I'd say you have things well in hand. However, then you mentioned the kids and those are the wild card, college, weddings etc.

 

[crazy connie]

Sounds like it should work if you do not need to fund a lot of college expense and are happy with a simple decent life. How does the wife feel about it and does she help income wise?

 

[rdjrn]

Wife works at the local medical clinic, makes about 30K per year. She's 12 years younger than I am, so maybe I can convince her to continue working?

 

[tuixiu]

Oversimplification = (400k+500k)*(4% rule) = $36k per year so monthly $3000+$1300+$700 = $5000/month gross with paid off house and health bennies. Solid.

 

[rdjrn]

And hopefully that 500K will grow in the next 7 years!!

 

[youbet]

rdjrn,

You really need to do a FireCalc run applying the info you gave us. As part of that, you'll be asked for an expense number, something you haven't provided and which folks are trying to guess at in their responses to you.

After FireCalc gives you a survival rate, come back with questions and there will be lots of folks ready to help.

 

[WB52]

On the top level, you look to be in good shape. Congratulations!
I know that you will want to be sure that you track your expenses and that they compare favorably (lower) with your projected income. Also, using Firecalc to evaluate multiple scenerios will give you a good idea of your probablilty of success based on past market results. The link to Firecalc is posted on this site.
If you are like me, you will want to look at the possibilities a thousand different ways before taking the FIRE plunge. Firecalc is great for that and will help reduce anxiety caused by the unknown.

Cheers!

 

[travelover]

Right. The missing part is your expenses. Although this is not an exact science, if you haven't taken a good shot at figuring out both a "like to spend" and "must spend" budget, it is hard to know if you'll have enough.

I'd say that it looks like you are in good shape, but it all depends on your expenses.

 

[Bestwifeever]

Yeah, I agree, depending on your expenses, you seem to be very comfortably set to retire at 59.5--if you can wait that long

 

[Rambler]

ditto, what are your expenses, now and projected for retirement? (i.e., more for travel and hobbies, less the amount you are now saving in 401ks and IRAs for retirement).

R

 

[smjsl]

As others said, expenses matter a lot, but also regarding the following oversimplification...

Oversimplification = (400k+500k)*(4% rule) = $36k per year so monthly $3000+$1300+$700 = $5000/month gross with paid off house and health bennies. Solid.

I think you may want to think about:
(1) Inflation: are $1300 and $700/month adjustable with inflation? There are 2 parts here actually:
(1a) Is it going to be $1300 7 years from now? If so, it's not the same as $1300 today. Same question for $700.
(1b) Once you start receiving these amounts, are they going to be auto-adjusted with inflation going forward? It will make a big difference even with low inflation, let alone high one.

(2) Taxes: is 400k lump sum going to be taxable? If so, you are looking more like at 200-250k, depending on tax laws in 7 years, and then if we have inflation, again, 200k in 7 years is less than 200k today. For example, with 3% average inflation, 200k in 7 years ~= 160k in today's dollars. (So if you are thinking of matching expenses with your income make sure you do both in today's dollars or both in dollars in 7 years.)

 

[jdw_fire]

(2) Taxes: is 400k lump sum going to be taxable? If so, you are looking more like at 200-250k, depending on tax laws in 7 years, and then if we have inflation, again, 200k in 7 years is less than 200k today. For example, with 3% average inflation, 200k in 7 years ~= 160k in today's dollars. (So if you are thinking of matching expenses with your income make sure you do both in today's dollars or both in dollars in 7 years.)

can you roll it to an IRA, hopefully?

 

[rdjrn]

Yes, both the $1300 and $700 amounts have annual COLA'S, and I can roll the 400K into an IRA.

 

[WB52]

You are starting to look Bulletproof!

 

[rdjrn]

I just ran Fire/Calc and it appears that If I work till I'm 59-1/2, I can withdraw $85K per year (about what I make now) and it should take me to 85 years of age.

Given the low cost of living in Arkansas, I'm tempted to pull the plug now at age 52 (at about 65K annually), however,.........5 school aged kids!!!

I suppose I'd better hang on until 59-1/2.

 

[youbet]

Given the low cost of living in Arkansas, I'm tempted to pull the plug now at age 52 (at about 65K annually), however,.........5 school aged kids!!!

I suppose I'd better hang on until 59-1/2.

I would. I'm relatively familiar with retirement living costs in Arkansas, at least northern Arkansas, and your savings for an equivalent life style may not be as dramatic as some would lead you to believe.

Compared to northern Illinois, real estate/housing is cheaper. But cars, groceries, utilities, clothing, booze, furniture are as much or more. Taxes depend on your situation. Real estate taxes are lower but state income taxes would be higher for me.

Bottom line, other than getting a replacement house for less money, it didn't seem like there were any big time savings for me vs northern Illinois. YMMV.

 

[Independent]

plus a very good company health plan that will cover me and my family until medicare kicks in at 65.

Unless management decides to drop the health plan for retirees .....

I'd look for a quote on individual health insurance for a family (with current ages +7) and add that to my potential spending.

 

[rdjrn]

Good point. My company seems in pretty good shape right now, but who knows what the future holds. I forgot to mention that I also have free VA medical care available if I need it.

 

[Finance Dave]

I am 52 with plans to retire at 59-1/2. and currently have a 401K worth $500K. I also have a company pension that should be worth around 400K Lump sum when I go, plus a very good company health plan that will cover me and my family until medicare kicks in at 65. In addition I receive a monthly tax free disability check from uncle sam for $1300. And finally, I will begin receiving my Army Reserve retirement check at age 60 ($700/Month).

I am married with four kids (aged 14, 12, 9 and 8). I owe about $38,000 on my house which should be completely paid for by the time I reach age 59.

I need some expert opinions here,.....am I on track to retire at 59-1/2?

You left out how much you spend/month today...which is a critical factor. Also, what's your housing situation? Is your home nearly paid off? How much do you save today? Too many unknowns IMO to give you a good answer, but certainly based on your balances you're ahead of most Americans. well done.

 

[Bimmerbill]

Once you start drawing your reserve component retirement check at 60 you also qualify for Tricare. My pension will be similar, when I turn 60.

 

[rdjrn]

Right now, with 5 kids at home I am only able to save about $500 per month, and my salary is around $80K. As for my home, I only owe about $38,000 and it will be paid off by the time I reach 59-1/2.

 

[FANOFJESUS]

Will the wife get some SS too at 62 or later?

 

[rdjrn]

Will the wife get some SS too at 62 or later?

Yep,..but she is 12 years younger than I am, so I'll be around 75 before that happens.

 

[FANOFJESUS]

I think your in good shape. The only enemy of yours I can see is health insurance for you and the wife. But with 500k and a paid for home you will be in great shape. Living in AR is cheap I know this from living in MO. Average household income in AR is around 41k in 2008. Census Bureau reports on income, poverty - USATODAY.com Many people from MO move to AR to retire.