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Old 10-22-2015, 09:26 PM   #21
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I just ran your numbers through ESPlanner Basic with the following results:


Year Your Age Her/His Age Discretionary Spending Non-Discretionary Spending Total Spending
2015 51 48 85,861 4,000 89,861
2016 52 49 85,861 4,000 89,861
2017 53 50 85,861 4,000 89,861
2018 54 51 85,861 4,000 89,861
2019 55 52 85,861 4,000 89,861
2020 56 53 85,861 4,000 89,861
2021 57 54 85,861 4,000 89,861
2022 58 55 70,052 4,000 74,052
2023 59 56 70,052 4,000 74,052
2024 60 57 70,052 4,000 74,052
2025 61 58 70,052 4,000 74,052
2026 62 59 70,052 4,000 74,052
2027 63 60 70,052 4,000 74,052
2028 64 61 70,052 4,000 74,052
2029 65 62 70,918 5,904 76,822
2030 66 63 70,918 5,961 76,879
2031 67 64 76,097 6,020 82,117
2032 68 65 94,249 8,161 102,410
2033 69 66 94,249 8,286 102,535
2034 70 67 94,249 8,415 102,664
2035 71 68 94,249 8,547 102,796
2036 72 69 94,249 8,684 102,933
2037 73 70 94,249 8,824 103,073
2038 74 71 94,249 8,969 103,218
2039 75 72 94,249 9,118 103,367
2040 76 73 94,249 9,272 103,521
2041 77 74 94,249 9,430 103,679
2042 78 75 94,249 9,593 103,842
2043 79 76 94,249 9,760 104,009
2044 80 77 94,249 9,933 104,182
2045 81 78 94,249 10,111 104,360
2046 82 79 94,249 10,295 104,544
2047 83 80 94,249 10,483 104,732
2048 84 81 94,249 10,678 104,927
2049 85 82 94,249 10,878 105,127
2050 86 83 94,249 11,085 105,334
2051 87 84 94,249 11,297 105,546
2052 88 85 94,249 11,516 105,765
2053 89 86 94,249 11,742 105,991
2054 90 87 94,249 11,974 106,223
2055 91 88 94,249 12,213 106,462
2056 92 89 94,249 12,459 106,708
2057 93 90 94,249 12,713 106,962
2058 94 91 94,249 12,975 107,224
2059 95 92 94,249 13,244 107,493
2060 96 93 94,249 13,521 107,770
2061 97 94 94,249 13,807 108,056
2062 98 95 94,249 14,101 108,350
2063 99 96 94,249 14,404 108,653
2064 100 97 94,249 14,716 108,965
2065 98 58,906 9,519 68,425
2066 99 58,906 9,684 68,590
2067 100 58,906 9,855 68,761

Assumptions:
- No SS
- Average of 3% real return

Looks to me that you are more than ready financially. Had to move your ages up 3 years because it won't let you retire before age 50.
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Old 12-01-2015, 03:19 PM   #22
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I like this for a more 'accurate' estimate of Social Security. I then use 75% of that result at 70.

http://www.ssa.gov/pubs/EN-05-10070.pdf
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Old 02-25-2016, 09:38 AM   #23
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Hi Nano

Totally missed your post until now-my bad. When you ran this analysis did you use a couch potato asset mix like 70/30 or our more conservative split mentioned early on in the post? I tried to use this tool but couldn't get the math to work the same way it did ran you ran it

Cheers!
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Old 02-25-2016, 02:40 PM   #24
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Hi Syd03,

Sorry to hear about the w*rk trials endured by you and your DW. Sound like you are in good shape though, regardless of what you and DW decide about w*rking vs retiring.

Welcome to Financial Independence (FI)! Deciding whether to retire (FIRE) also is another separate question. In any event, you both have a long time to decide what you want to do, several decades if necessary!

Several comments:

- I suspect that your retirement budget would be around $ 60K ish per year when accounting for ACA health insurance. Perhaps lower 60K's with subsidy, mid 60K without (can't assume they'll last forever with your timeframe). Also, health insurance premiums obviously increase with age. Anyway, a 60K ish budget is very efficient because of thousands of $$ in ACA subsidies and lower federal income and cap gains taxes, very important when spending after tax equities. Federal taxes will be a pleasant surprise when you both retire!

- Given above, looks like your have a 3% SWR, inflation adjusted (if you wish). Should almost certainly get you 3 decades of spending, and probably 4+ decades. This is even before SS! This is a pretty good "worse case".

- Please don't entirely disregard SS. I FIRED at 46, income similar to your DW. SS website projected 20K/yr gross starting at 62 yo, but I discount down to 10K-15K for planning. So for you guys, this is easily another 20K-30K gross (COLA'd) starting at 62, even more if you start later. This could be almost half your budget within 15 yrs of hopefully a 40+ yr joint retirement! You could enter the hallowed ground of sub 3% SWR long term.

- As others have suggested, the first 10-15 year of ER are most sensitive to bear equities markets (sequence of return risk). Yet, you have lots going for you including new cars and new paid-off house. Also your after-tax accounts hold 2 years in cash and an additional 4+ years in bonds. I use a similar arrangement to help me sleep at night and so do others here.

- Like other commenters, I'm not a fan of large cash holdings in you tax deferred accounts, which most likely won't be deployed for 10-15 yrs. Suggest 50/50/0 equities/bonds/cash, better yet 60/40/0 or even more equities given your long retirement timeframe and the probability of a decade of historically weak bond yields. If desired, you can reduce your equities in your after-tax accounts accordingly.

- I hope that your average expense ratio is low, say below 0.25%. You have a (hopefully) very long haul and investment expenses will kill you over the decades. It almost goes without saying, but if you are paying 1.5% or more yearly to a financial advisor (FA), then this by itself could risk an otherwise sound plan!

- On the non-financial side, check out Ernie Zelinski's classic "How to Retire Happy, Wild, and Free." The adjustment from w*rk to retirement can be a challenge if you don't have something to "retire to". Zelinski's book covers the full range of issues from an emotional perspective.

- Glad you and DW are considering retirement at roughly the same time. From personal experience, I believe that retirement, regardless of when, tends to make good marriages even better.

Overall, you'll be fine. You've got strong savings, and, most importantly, seem to have forethought and sense. Good luck!

FB
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Old 02-25-2016, 03:33 PM   #25
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[QUOTE=FreeBear;1701159]Hi Syd03,

Sorry to hear about the w*rk trials endured by you and your DW. Sound like you are in good shape though, regardless of what you and DW decide about w*rking vs retiring.

Welcome to Financial Independence (FI)! Deciding whether to retire (FIRE) also is another separate question. In any event, you both have a long time to decide what you want to do, several decades if necessary!

Several comments:

- I suspect that your retirement budget would be around $ 60K ish per year when accounting for ACA health insurance. Perhaps lower 60K's with subsidy, mid 60K without (can't assume they'll last forever with your timeframe). Also, health insurance premiums obviously increase with age. Anyway, a 60K ish budget is very efficient because of thousands of $$ in ACA subsidies and lower federal income and cap gains taxes, very important when spending after tax equities. Federal taxes will be a pleasant surprise when you both retire!

- Given above, looks like your have a 3% SWR, inflation adjusted (if you wish). Should almost certainly get you 3 decades of spending, and probably 4+ decades. This is even before SS! This is a pretty good "worse case".

- Please don't entirely disregard SS. I FIRED at 46, income similar to your DW. SS website projected 20K/yr gross starting at 62 yo, but I discount down to 10K-15K for planning. So for you guys, this is easily another 20K-30K gross (COLA'd) starting at 62, even more if you start later. This could be almost half your budget within 15 yrs of hopefully a 40+ yr joint retirement! You could enter the hallowed ground of sub 3% SWR long term.

- As others have suggested, the first 10-15 year of ER are most sensitive to bear equities markets (sequence of return risk). Yet, you have lots going for you including new cars and new paid-off house. Also your after-tax accounts hold 2 years in cash and an additional 4+ years in bonds. I use a similar arrangement to help me sleep at night and so do others here.

- Like other commenters, I'm not a fan of large cash holdings in you tax deferred accounts, which most likely won't be deployed for 10-15 yrs. Suggest 50/50/0 equities/bonds/cash, better yet 60/40/0 or even more equities given your long retirement timeframe and the probability of a decade of historically weak bond yields. If desired, you can reduce your equities in your after-tax accounts accordingly.

- I hope that your average expense ratio is low, say below 0.25%. You have a (hopefully) very long haul and investment expenses will kill you over the decades. It almost goes without saying, but if you are paying 1.5% or more yearly to a financial advisor (FA), then this by itself could risk an otherwise sound plan!

- On the non-financial side, check out Ernie Zelinski's classic "How to Retire Happy, Wild, and Free." The adjustment from w*rk to retirement can be a challenge if you don't have something to "retire to". Zelinski's book covers the full range of issues from an emotional perspective.

- Glad you and DW are considering retirement at roughly the same time. From personal experience, I believe that retirement, regardless of when, tends to make good marriages even better.

Good luck!

Free Bear...thanks for the response. I so much appreciate the insight.

As far as expense ratios,-all are low. The majority of our assets are with Vanguard, T Rowe and a couple 401Ks through Fidelity. Most funds are indexed.

We have not used a financial advisor. I searched a while back for a fee-based FA to run a few ideas past. But we live in a fairly remote small town and I wasn't able to find any within reasonable distance. Could speak by phone I suppose but I'd prefer to meet the individual face to face. I was never comfortable paying a percentage based planner.

We are fairly well diversified. But outside of the obvious (spend taxable first/hold off on tax deferred as long as possible), we struggle a bit with how to set up the draw down phase from the various tax def accounts. When changing jobs through the years (and we both did this a few times-some forced/some not) we made the mistake of rolling old 401Ks into trad iras and spreading the money out over way too many different funds. And we didn't pay a whole lot of attention to tax efficiency and things like that. It was more a matter of 'this looks good, has performed well...let's throw some money here and there". Now we own several IRAs, still are in 401Ks and between them own too many funds by far. Now I need to figure out that scenario.

Of course Vanguard would prefer to manage the whole lot, and has some suggestions on how to simplify it, once consolidated, into just a couple different funds. Same with T Rowe and Fidelity. Problem is DW and I don't really want to merge everything together with one fund company...we just feel a bit more comfortable spreading things out a bit. But this creates some confusion on our part knowing how to split it up within each fund company. This is why I hoped to find a fee based, objective person-to help sort this out.

At least I have a little bit of time to revamp the tax def accounts. Any suggestions you have on how/when to simplify-I'd love to hear them!

Anyway, I'm rambling on at this point. Thanks for listening!!
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Old 02-25-2016, 04:19 PM   #26
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To retire would be ideal but I think you should explore retraining options offered by your local public community college. You will want to do something to keep busy and with luck you will get paid for your efforts. Given your work history I think you can qualify for free programs. Talk to your local employment service.
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Old 02-25-2016, 05:11 PM   #27
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If it was me, I'd start looking for easy ways to earn just $10K - $20K/year part time. If spouse did the same, investments would have to cover only a small, entirely sustainable gap. See Bob Clyatt's book on semi-retirement called "Work Less, Live More."
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Old 02-25-2016, 11:52 PM   #28
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Just a note for syd. When you hit the quote button, make sure you don't delete the [/quote] from the end of the quoted passage. You'll end up with a nice little quote box that way.


Edit: Oops, I see you were doing it right before. Probably just a typo this time. Sorry.
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Old 02-26-2016, 12:33 AM   #29
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How about spending some years in low cost countries?
If you do it soon it might expose your kid to new language ang lifestyle. If you do it while kid is in college it will stretch your budget.
Look into the blogs of perpetual travellers.
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