Avoiding OMY Syndrome Article

[Andre1969]

T

Review your "magic numbers" and pick a day to quit! Life gets much happier after you do.

I wish I had some "magic numbers" coming up, but unfortunately they all come up long after I intend to retire.

The first one will come up in October 2029, when I hit 59.5, for penalty-free withdrawals from the tax deferred stuff. Guess I can always 72t if I want it early though. Or go into the part of the Roth that I contributed to, if I need to.

The next "magic number" is in 2032, when I turn 62 and am eligible for early SS benefits. It just has to be the year you turn 62, right? And not after you've turned 62? I turn 62 in April 2032.

The final "magic number" is pretty minor. In April 2035, when I turn 65, I'll get $349.21, non-COLA'ed, per month from a small pension. I doubt if that'll be much of anything by then, though.

Right now, I'd say my biggest "magic number" is a floating point. It's when my portfolio hits 33x annual expenses. currently I'm hovering around 20x.

 

[sengsational]

I wish I had some "magic numbers" coming up, but unfortunately they all come up long after I intend to retire.

The first one will come up in October 2029, when I hit 59.5, for penalty-free withdrawals from the tax deferred stuff. Guess I can always 72t if I want it early though. Or go into the part of the Roth that I contributed to, if I need to.

The next "magic number" is in 2032, when I turn 62 and am eligible for early SS benefits. It just has to be the year you turn 62, right? And not after you've turned 62? I turn 62 in April 2032.

The final "magic number" is pretty minor. In April 2035, when I turn 65, I'll get $349.21, non-COLA'ed, per month from a small pension. I doubt if that'll be much of anything by then, though.

Right now, I'd say my biggest "magic number" is a floating point. It's when my portfolio hits 33x annual expenses. currently I'm hovering around 20x.

You have another magic number: January 2025...You'll have penalty-free access to 401k funds! The leaving employment (for any reason) the year you turn 55. I also like the x times annual expenses measure. Seems it should be mentioned more on this board than I see it, but maybe folks go with mentioning the FIRE Calc result, since that one, you don't need to also state the number of years you'll be spending. 33x for a 40 year old is a lot different than 33x for an 85 yo.

 

[Andre1969]

You have another magic number: January 2025...You'll have penalty-free access to 401k funds! The leaving employment (for any reason) the year you turn 55. I also like the x times annual expenses measure. Seems it should be mentioned more on this board than I see it, but maybe folks go with mentioning the FIRE Calc result, since that one, you don't need to also state the number of years you'll be spending. 33x for a 40 year old is a lot different than 33x for an 85 yo.

Yeah, I had thought about that one for the 401k funds, as well. Unfortunately, in my line of work, gov't contractor, the incumbent usually loses every time it comes up for renewal. So, every 5 years, I tend to have a new employer, although I do get to keep my seniority. So while I have 21 years of seniority in, I've only been with this company about 4 1/2 years. My previous two employers made me convert the 401ks into Rollover IRAs. My first employer did not, but there's only about $17,000 in that one.

I'll probably nave a new employer in April 2014, unless the incumbent wins the bid, or there's a dispute that drags things out. And I imagine they'll make me convert the current 401k to a Roller IRA, as well.

As for my age, I'm 43 and right now my retirement goal is pretty open-ended. I figure I'll hang out at work until it isn't fun anymore, but no later than my 50th birthday, in April 2020.

 

[Steelart99]

Okay ... so what is the x times annual expenses measure?

 

[sengsational]

Okay ... so what is the x times annual expenses measure?

Since I made that post, I've seen it all over the place on this board. In another thread, I wrote this:

I think if you subtract cola pensions from your expected burn rate and divide that into your savings, that would be a pretty good question to get answered. Then you have other fine-tuning like, do you somehow cola-ize your non-cola streams, and what if you're waiting for a cola stream (SS) and do you include your home equity in the savings number, is your expected burn rate adjusted by spending more (health costs) or less (spending more time in the rocking chair) as you get up there in age. It can go on forever, which is why this board is so much fun!

Here, "burn rate" is how fast you expect to spend money in retirement. Since most people have future income from pensions or social security, those need to be adjusted for. Since you don't need to raid your nest egg if you're living off a pension, that's why you subtract that. So say your annual spending is projected to be $50,000 per year and you have a $10,000 per year pension that is adjusted for cost of living. If you had $1M in the bank then your number would be 25x [1000/(50-10)].

 

[sengsational]

My previous two employers made me convert the 401ks into Rollover IRAs.

Bummer. I worked for megacorp-A for 19 years (but only part of that time had a 401k), and I kept it in their 401k until recently, even though I hadn't worked there in 15 years. The expense ratios were unbeatable if you stuck to the core offerings, which included an index fund, which is all I needed. With my megacorp-B employer, I could have left the 401k but they were more slimy and it wasn't such a great deal, so that one ended up as a rollover IRA. And now, current megacorp-C, I've been there for 4 years and just recently moved the megacorp-A funds over, so I can use the 55 rule if I need to.

 

[Dog]

This topic resonates - DH will retire 5/2016 at 58. He will have his 30 years and and qualify for FERS (he is counting the days!). I took an early out package in 11/2003 took a couple of months off and and have worked FT+ since. I will be vested at my current employer 4/2014 and an eagerly looking to retiring "for real" either 6/2014 or 12/2014 or 6/2015 or.......you get the picture. Just completed a retirement review with Vanguard and got a 100% success rate and FireCalc gives us the same. The hurdle for me is giving up the security of a paycheck. It will be a challenge for me to start drawing down our nest egg rather than adding to it - I have always been a saver.