Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Are we ready with this?
Old 11-13-2013, 01:59 PM   #1
Recycles dryer sheets
 
Join Date: Nov 2013
Posts: 72
Are we ready with this?

We have woken up some and changed our ways. We switched from high consumerism lifestyle to living on a budget awhile back. Current spending is still high but it is what we are going forward with and we have been on it for a year. For months I have been struggling with how close are we to FIRE. I know only we can make the call but the scenario:

Assets in investments: $1,600,000
Ages: 45/57, kids grown and out of college.
Debt: $196K mortgage on house value of $310K. Taxes are high but we wouldn't move away from family that is in the area.
Pensions: no COLA, one could start in 2014 at $17,000 per year, the other in 2024 at $22,000
Spending: $78K a year.
Biggest concern besides long term care eventually, health insurance: planning on sticking with employer offered insurance in retirement at $13,000 per year for first year projecting going up 9% a year
No expensive hobbies other than we would like to travel a few times each year.
Great desire/need for at least one of us to exit a career job ASAP.

FireCalc seems to give us a 88-92% success rate depending on what settings are used, but I am a novice on using firecalc. Other Calcs seem to be similar.

1) any feedback on how close we are financially (we are also reading books on preparing for retirement from an emotional and keep active standpoint)
2) any words of wisdom?
3) succinct resources to be able to help alleviate fears of we go to early and run out of money at the time we can no longer work?
4) how to find an "expert" such as a retirement advisor to help us determine if we are on the right track since many would be thrown from our atypical age and wealth scenario? Our current investments are managed and that may change once in retirement if I take it over, but we were hoping to get an outside opinion.

Thanks much on any (even harsh) feedback.
__________________

__________________
Sunny is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 11-13-2013, 02:04 PM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
braumeister's Avatar
 
Join Date: Feb 2010
Location: Northern Kentucky
Posts: 8,630
Looks to me like you're close but not quite there yet.

Biggest factor is the spending. Are you keeping close track of it? Does it include the mortgage and healthcare? Have you really been capturing every dollar of your spending for at least six months (a year would be better)? Are your investments allocated in a way to let you sleep even if things go south for a while?
__________________

__________________
braumeister is offline   Reply With Quote
Old 11-13-2013, 02:20 PM   #3
Recycles dryer sheets
 
Join Date: Nov 2013
Posts: 72
Quote:
Originally Posted by braumeister View Post
Looks to me like you're close but not quite there yet. Biggest factor is the spending. Are you keeping close track of it? Does it include the mortgage and healthcare? Have you really been capturing every dollar of your spending for at least six months (a year would be better)? Are your investments allocated in a way to let you sleep even if things go south for a while?
Spending does include mortgage and insurance. I too feel like we could cut back in this area but my wife wants to be able to cut back because we want to (e.g. not eat out because we now have time to cook) vs we have to cut back to make it. Both of us are easily willing to work part time fun jobs as needed for extra spending or less withdrawl the first few years. Spending has been tracked for a bit over a year, but very very closely using ynab budgeting software this entire calendar year. We have had to occasionally move allocated dollars between categories, but we have stuck with it without much pain. I too have this feeling that we are close but not there. But with my being the one needing to exit a career, the chance of increasing our wealth diminishes greatly. Curbing spending could get us ere, but I don't know by oh much. If we do $70K instead of $78K? $65? $60?
__________________
Sunny is offline   Reply With Quote
Old 11-13-2013, 02:50 PM   #4
Recycles dryer sheets
 
Join Date: Jan 2013
Posts: 117
Are you making sure to add in taxes when you put things in Firecalc? This makes a big difference. Also what amount of your investments are in taxable vs tax deferred vs tax exempt? That also has a large impact.

Also are you adding vehicle replacement and home repairs into your budget? It is important to add in these numbers to get an accurate spending amount.

Are you eligible for SS? Have you looked at different claiming strategies? With your large age difference you need to look at all the different ways you could claim. It all depends on the differences in your respective SS PIAs.
__________________
RetiringAt55 is offline   Reply With Quote
Old 11-13-2013, 02:55 PM   #5
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
braumeister's Avatar
 
Join Date: Feb 2010
Location: Northern Kentucky
Posts: 8,630
Quote:
Originally Posted by bspooky View Post
my wife wants to be able to cut back because we want to (e.g. not eat out because we now have time to cook) vs we have to cut back to make it.
Smart woman.

Quote:
Both of us are easily willing to work part time fun jobs as needed for extra spending or less withdrawl the first few years.
Then it wouldn't really be ER, would it?

Quote:
I too have this feeling that we are close but not there.
Gut feelings are often underrated.

Quote:
But with my being the one needing to exit a career, the chance of increasing our wealth diminishes greatly. Curbing spending could get us ere, but I don't know by oh much. If we do $70K instead of $78K? $65? $60?
I suggest the first thing to consider is play around with FIRECalc a bit more, and you should be able to answer your own question. Seriously, dig into the instructions a bit (How it works) and I think you'll be much farther ahead.

Not that I would discourage more questions here -- most of us are smarter than I am.
__________________
braumeister is offline   Reply With Quote
Old 11-13-2013, 02:59 PM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,387
Quote:
Originally Posted by bspooky View Post
Thanks much on any (even harsh) feedback.
The performance of your portfolio, level of inflation, etc., etc. is pretty much up to God. Expenses can be changed, if it is important enough. There are people here who claim whole families living on less than many of us singletons, and considerably less than you two. Some even offer to tell us how.

If really digging down and making getting by cheaply is perhaps worth giving up a lot of standard of living and an unknown amount of security, read what these people have said over the years on here and elsewhere.

A couple your ages has a long life ahead.

Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Old 11-13-2013, 03:59 PM   #7
Thinks s/he gets paid by the post
robnplunder's Avatar
 
Join Date: Nov 2013
Location: Bay Area
Posts: 2,124
bspooky,

Your situation is fairly close to mine. After some thinking in the last few months, I reached a conclusion that I can use several more years to build up the asset over $2M. To me, it's a new car every so often and other unknown things that is yet to come which pushed me to save some more. So, although I can retire with 1.6M + house equity ($300k for mine) now, I decided to hang on to my job for a few more years. At 51, I think I am not in particular hurry and the added saving will give me a bit of cushion, and comfort for years to come.

One sobering thought for me and all who are thinking to retire at age 50 or so:

If you are a man about 50, your US life expectancy is 83 (give or take a few years since I am quoting this out of memory). That's 30+ years of retirement life. Women lives 5 - 10 years longer (and typically younger than their husbands). So, effectively, your retirement strategy has to last 30 - 40 years if you want to retire at 50. That's a long time for a lot of things to happen to your money, ssa, world economy, etc..
__________________
robnplunder is online now   Reply With Quote
Old 11-13-2013, 04:07 PM   #8
Thinks s/he gets paid by the post
imoldernu's Avatar
 
Join Date: Jul 2012
Location: Peru
Posts: 4,616

Some encouragement...
Yeah! do it... enjoy... plenty of time to recover...

remember... you're a long time dead.

from:
"not rich, but happy"
__________________
imoldernu is offline   Reply With Quote
Old 11-13-2013, 04:31 PM   #9
Administrator
W2R's Avatar
 
Join Date: Jan 2007
Location: New Orleans
Posts: 38,948
I don't know.... I'd feel more confident if FIRECalc was giving you a 95%-100% probability of success, and if you said you were absolutely sure you had tracked your expenditures long enough and in enough detail.

But then I do tend to err on the side of caution. Personally I would never dream of spending as much as FIRECalc says I can spend with a 95% probability of success. Maybe I will relax a little about it as time passes.

Have you thought of perhaps working long enough to pay off your mortgage first? That could lower your expenditures quite a bit, and it shouldn't take long if you are putting the entire yield from that $1.6 million portfolio plus substantial additional savings from your salary, into the mortgage.
__________________
Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities.

- - H. Melville, 1851
W2R is offline   Reply With Quote
Old 11-14-2013, 12:41 PM   #10
Thinks s/he gets paid by the post
Live And Learn's Avatar
 
Join Date: Feb 2012
Location: Tampa Bay Area
Posts: 1,689
if you could break your $78k in spending down by categories we may be able to tell if you are missing anything that you might need to budget for.

Other things to consider: Are both you and your spouse working and will both of your be leaving the workforce ? Would you be able to return to your profession after a break of 3 or more years if you needed to ?
__________________
"For the time being no discipline brings joy, but seems grievous and painful; but afterwards it yields a peaceable fruit of righteousness to those who have been trained by it." ~
Hebrews 12:11

ER'd in June 2015 at age 52. Initial WR 3%. 50/40/10 (Equity/Bond/Short Term) AA.
Live And Learn is offline   Reply With Quote
Old 11-14-2013, 01:08 PM   #11
Recycles dryer sheets
 
Join Date: Jan 2013
Posts: 96
I keep hearing about those "fun" part time jobs; I don't think many exist so wouldn't plan on that. I'd rather put in the extra time at the higher paying full time career to minimize the possibility of needing extra income.
__________________
enjoyinglife102 is offline   Reply With Quote
Old 11-14-2013, 02:28 PM   #12
Recycles dryer sheets
 
Join Date: Nov 2013
Posts: 72
Thanks for all the responses. To answer some of the questions:

Tax: Most of the 1.6M is not tax sheltered unfortunately. However, if we as a couple have less than 72.5k income a year then taxes on gains shouldn't be too harsh, but I admit I am may be missing something here.

Life expectancy: 3/4 of our parents died in their 60s, the other in their early 70s. 3/4 was brought on by their lifestyle (smokers, etc.), but my brother also passed in his 40s and the male side of my family have rarely made it to the 70s, though my mom's side lived a lot longer (other than her). We still need to plan to be into our 90s, but who knows.

Mortgage paid off: I flip flop on this. At a 4% interest rate bringing some tax advantages on the interest it almost makes more sense to invest savings vs payoff mortgage, but I know there are two schools of thought on this.

Smart wife: Yes, yes she is. :-)

SS: We are both eligible and it is a great point that with our age difference we are going to need to look closely at when to start it.

Vehicles: Both paid cash for, one a 2010 with 20k miles and one a 2013 with a few thousand miles. So hopefully good for a long while, but a replacement bucket may be in order. Although our car maint. bucket has a good chunk of change in it so far.

Fun part time jobs: Fun is probably relative. But also part time jobs to remain active seem like a good thing...but maybe we are kidding ourselves. Even working in retail at a sporting goods store sounds fun to me, at least for 3-4 months, then break, then do it or similar again. Eons ago I was a teacher, and subbing may even be fun at $130 a day.

Budget: Yeah, I know there are areas that are embarrassingly high.

Dining out: 600
Gas: 250
Groceries 350
Other store (household supplies, etc.): 200

Mortgage/Tax: 1800
Auto maint: 150
Utilities: 270
Insurance (health/auto/home): 1450
Copays: 100
Cellphones/tablets: 300

personal care: 90
home repair: 345
Entertainment: 40
Clothing: 90
Misc: 50
Gifts: 120
Travel: 325

I would hope in retirement (if we both quit our career jobs) our dining out would be a lot less, but there may be a corresponding increase in groceries or other areas too.
__________________
Sunny is offline   Reply With Quote
Old 11-14-2013, 02:32 PM   #13
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Feb 2013
Posts: 5,327
I wouldn't count on a fun part time job unless you have one now. Also I agree on your spending being your only hold up. Did you account for Social Security? Personally I wouldn't quit until I had the retirement planners all at 100% with a conservative portfolio mix, plus a cushion, but I don't have a lot of risk tolerance.

If you can get your spending down and arrange your taxable income and MAGI to be fairly low, you may be able to pay zero taxes and only pay a nominal amount for health insurance premiums under the ACA Bronze plan, so cutting a bit more might snowball a decrease in expenses when you add in tax and health insurance savings.

In your spot we just decided we wanted more free time and cut our spending to fit our retirement level income. We printed out the Consumer Expenditure Survey and compared our budget to see where we were high. We realized we could self insure life and disability insurance now. We cut our grocery and energy bills in half, dropped the land line, are getting prepaid cell phone plans, etc. It was all stuff we no longer needed or missed, but going over the budget line by line like that really resulted in a huge annual expense reduction.

For dining out we are home to go out for lunch when the food is the same but the prices are cheaper, get newsletters specials, and use Entertainment coupons. The Entertainment coupons are great. Many are buy one dinner get one free. If you aren't doing that now there's $300 in potential savings right there, or $144K in less retirement funding needed over 40 years.

Every $100 you cut a month from your expenses means needing almost $50K less in retirement funding over a 40 year retirement.
__________________
daylatedollarshort is offline   Reply With Quote
Old 11-14-2013, 02:52 PM   #14
Dryer sheet aficionado
 
Join Date: Nov 2013
Location: Princeton NJ
Posts: 38
I think you're getting there, but you're not quite safe yet.

A lifetime inflation adjusted annuity could really help here and might be something to think about. But I'd wait for long-term interest rates to go up a little more.
__________________
IlliniProgrammer is offline   Reply With Quote
Old 11-14-2013, 07:33 PM   #15
Confused about dryer sheets
 
Join Date: Nov 2013
Location: Albany
Posts: 3
Hi Bspooky, thanks for posting your budget. We all have different lifestyles and I'm new here, so forgive me if I say something dumb. (I'm 50 by the way, and trying to retire at 55).

Two things in the budget jump out at me as areas that could be reduced quite a bit. Dining out and Groceries combined is $950 for two people I assume. That is $30 a day on food. In retirement, one will have more time to shop the grocery ads and to cook at home. Also, preparing meals at home for two is not much more than preparing meals for one. Rather, it is not twice as expensive to do so. I would think that two could eat very healthily and tastefully for $15 a day and cut that bill in half. (I do the grocery shopping and cooking in my house). It would be a lifestyle change compared to what one is doing now, but that is part of retirement.

The second item is the $300 on cellphones/tablets. I'm not sure of the breakdown you have, but if one can do without the ability to surf the web while walking down the street then one saves a bunch of money. For instance, my teen daughter pays for her own plane and she has an Apple iPhone through AT&T that costs $50/month for unlimited talk and text. To surf the web, she needs to find a wifi spot. At home, we bundle our high speeed internet with our landline (which I believe you gave up) for $80/month, but if you have cable or whatever, and you have internet at home, you know what that costs you. Still let's go with that, assuming one pays $80 + $50, this is $130/month. If you need two phones, than it bumps up to $180/month, but I would think that could be dropped down. For instance, my wife and I share a cell phone rather than each of us having one.

Just my initial thoughts.

I would encourage you (especially with your family history) to try and make it happen. I understand the pressures -- my dad was gone at 63 (before he retired), my father in law (not related but still very close to me) at 58, my grandfather at 69. I will plan on retiring for 40 years financially, but I will not work until I'm 67 to make that happen, as there is a good chance I won't get there.
__________________
sdawson is offline   Reply With Quote
Old 11-14-2013, 08:30 PM   #16
Recycles dryer sheets
 
Join Date: Nov 2013
Posts: 72
Quote:
Originally Posted by sdawson View Post
Hi Bspooky, thanks for posting your budget. We all have different lifestyles and I'm new here, so forgive me if I say something dumb. (I'm 50 by the way, and trying to retire at 55).

Two things in the budget jump out at me as areas that could be reduced quite a bit. Dining out and Groceries combined is $950 for two people I assume. That is $30 a day on food. In retirement, one will have more time to shop the grocery ads and to cook at home. ......

The second item is the $300 on cellphones/tablets. ......if you have cable or whatever, and you have internet at home, you know what that costs you. Still let's go with that, assuming one pays $80 + $50, this is $130/month. ...
Nothing to forgive even if what you said was dumb (which I doubt it could be, LOL). You are correct that in retirement I think our groceries/dining out could be drastically reduced. Just stop treating restaurants as the refrigerator would help too. And yeah, we ditched the landline a long time ago in favor of an obitalk device using our home internet for phone service and a google number. The $300 likely should be paired down to as you discuss. Thinking about it now, maybe one smartphone for my wife and I can just do a prepaid for emergencies. We actually talked about getting rid of a car too (similar to how you said only one cell phone for husband and wife).

Fortunately we don't have a cable TV habit...we are a bit out of touch with some of American culture as we do not have TV reception either. Oh, I am sure with an antenna we may be able to get something, but we don't feel like we are missing anything other than perhaps some references coworkers make.


daylatedollarshort....no, we have not figured SS into our plans. I didn't feel like it would have a drastic impact and liked leaving it out as a bit of a hedge vs inflation or bad times. I know, those seem like speaking out of both sides of my mouth with it being not much to maybe helping...fuzzy math I guess. And the ACA is so much in flux right now that it is hard to count on too, but definitely worth looking into. As is comparing our spending to that consumer expenditure survey. I didn't know that existed.
__________________
Sunny is offline   Reply With Quote
Old 11-14-2013, 10:47 PM   #17
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Feb 2013
Posts: 5,327
Quote:
Originally Posted by bspooky View Post
daylatedollarshort....no, we have not figured SS into our plans. I didn't feel like it would have a drastic impact and liked leaving it out as a bit of a hedge vs inflation or bad times. I know, those seem like speaking out of both sides of my mouth with it being not much to maybe helping...fuzzy math I guess. And the ACA is so much in flux right now that it is hard to count on too, but definitely worth looking into. As is comparing our spending to that consumer expenditure survey. I didn't know that existed.
Social Security for two can be worth quite a bit depending on your earnings history. You might want to run your plan numbers with at least some portion of SS included.

The Consumer Expenditure Survey tables are here -

CE Expenditure Tables
__________________

__________________
daylatedollarshort is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


 

 
All times are GMT -6. The time now is 09:26 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.