Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Can I retire now?
Old 08-18-2014, 12:18 AM   #1
Confused about dryer sheets
 
Join Date: Aug 2014
Posts: 2
Can I retire now?

Hello Folks,
This is a great forum and I appreciate all the advise offered by the members.

I have $800k in fixed income (yield 3% annually)
I have $800k in mutual funds and dividend stocks
I have a paid off house $350k.

Net worth $1950k

No debt or mortgage. 2 kids 18 years & 14 years.
Both wife and I are 43 years old

annual house hold income $100k (wages from employer) after tax
annual additional income dividend & fixed income is $51k after tax..

We live a modest life style and was wondering if I can retire?

Annual house hold expense is $36k
__________________

__________________
welcome 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 08-18-2014, 12:30 AM   #2
Thinks s/he gets paid by the post
growing_older's Avatar
 
Join Date: Jun 2007
Posts: 2,609
Yes, your assets easily support 36k annually. You can run FIRECalc to get better estimates. Also, with kids at that age you will need to decide what you want to do about funding college.
__________________

__________________
growing_older is offline   Reply With Quote
Old 08-18-2014, 12:43 AM   #3
Recycles dryer sheets
 
Join Date: Mar 2014
Location: Shelton, Washington
Posts: 62
I like the Flexible Retirement Planner to get an estimate in your situation. In addition to your kids education, is health insurance covered in your $36k estimate? If leaving your employment requires you to fund HI coverage, you will need to include it in your expense estimate.
__________________
Jaded salami is offline   Reply With Quote
Old 08-18-2014, 06:37 AM   #4
Thinks s/he gets paid by the post
2B's Avatar
 
Join Date: Mar 2006
Location: Houston
Posts: 4,330
You really shouldn't include your house in determining your investable assets. You have $1.6MM to invest. You've provided very few details other than that so your age and family situation so possible pensions/SS are missing.

The "classic" FireCalc income from $1.6MM is $68,000/year which theoretically increases with inflation. This is gross and doesn't include taxes or expenses such as health insurance which you will have to pay for out-of-pocket. I'm guessing you'd need to budget close to $15,000 for health insurance for your family. Adding that to your current expenses of $36K, raises your costs to $51K. I'll then throw in $8K for taxes and say you could get by for $59K/yr. You theoretically could retire on what you have but there is effectively very little reserve for larger expenses such as home repairs or car replacement. Being 43, most people here use more conservative estimates for their SWR for long retirements.

Based on this quick analysis, you really can't retire now unless you cut your expenses, get free health care or have a plump pension coming. You are getting close so keep up what you are doing and you will probably be safely financially independent before you are 50 if you control your lifestyle.
__________________
The object of life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane -- Marcus Aurelius
2B is offline   Reply With Quote
Old 08-18-2014, 07:22 AM   #5
Thinks s/he gets paid by the post
Senator's Avatar
 
Join Date: Feb 2014
Location: Eagan, MN
Posts: 3,070
You can make it; it depends on how lucky you feel...

I fail to see how any family of 4, not on Medicare or public assistance, can live on $36k a year. But assuming that is correct, are you covered for inflation? Income taxes? But many do, and I have had many low income people that rented from me do it.

Most of my low income renters were on some sort of public assistance and often collected a few thousand in SSI for their kids. With your assets, it is not likely you would get an EBT card, free rent, free legal assistance, free medical care, free bus fare, free cell phones, and be eligible for many other programs. Many also worked for cash doing various things. They made it on less than 36K a year in income, but the freebie package was probably worth over $50K.

You have to live somewhere; your home is not really equity that you can draw from. At a 4% withdrawal rate, ~1.5M is only $60K a year. And at 43, you should be shooting for a 3% or less withdrawal rate.

Are you sure you only spend $36K a year? That is the big question. You need to add in some money for income taxes too. Maybe that $51K in income is counting that? Is the $51K tax free?

Can you make it? The answer is yes. Will you want to live in that $36K lifestyle, and always worry about the next thing that could derail you?, is the real question.
__________________
FIRE no later than 7/5/2016 at 56 (done), securing '16 401K match (done), getting '15 401K match (done), LTI Bonus (done), Perf bonus (done), maxing out 401K (done), picking up 1,000 hours to get another year of pension (done), July 1st benefits (vacation day, healthcare) (done), July 4th holiday. 0 days left. (done) OFFICIALLY RETIRED 7/5/2016!!
Senator is online now   Reply With Quote
Old 08-18-2014, 07:46 AM   #6
Thinks s/he gets paid by the post
gauss's Avatar
 
Join Date: Aug 2011
Posts: 1,712
Have you checked what you and DW have accrued under SS to date yet? You can do this at ssa.gov with their "Retirement Estimator" but be sure to enter '0' for last years earnings, so that it assumes '0' for all future years.

If you delay drawing to age 70 and have at least 10 years of earnings history then you may be surprised by the amount of your accrued benefit. If you want to be conservative, assume that you will only get 2/3 of the amount in case the current law changes in the future. Still might be the difference in being able RE now vs. later.

-gauss
__________________
gauss is offline   Reply With Quote
Old 08-18-2014, 11:15 AM   #7
Full time employment: Posting here.
 
Join Date: Nov 2008
Posts: 728
based on fixed income 800k X 3% = $24,000 and mutual finds at 800k X2%=$16,000 or a total of $40,000, I don't know how you safely come up with $51,000. Additionally, your kids are getting to the expensive age.....more food, lessons, college, etc. And, you need family health care, I don't see how you can live on $36,000 per year. I'd work a few more years if I were you......and, since the market is at a high right now and bonds couldl lose money when interest rates go up, your 1.6 million could lose value in the next few years.....I wouldn't do it but good luck with your decision.
__________________
jerome len is offline   Reply With Quote
Old 08-18-2014, 12:22 PM   #8
Confused about dryer sheets
 
Join Date: Aug 2014
Posts: 2
Very much appreciated the feedback.
Yes I can live on income of 36k. However biggest challenges are the inflation and being young.. I think I will work few more years.

Thanks again for all the feedback..
__________________
welcome is offline   Reply With Quote
Old 08-18-2014, 05:06 PM   #9
Thinks s/he gets paid by the post
38Chevy454's Avatar
 
Join Date: Sep 2013
Location: Cincinnati, OH
Posts: 1,587
I agree that working a bit longer will enable additional savings to build up, plus defer withdrawals. It will also get you further into kids college or other education funding and knowledge what that will be. Since you have to have a place to live, the house is not really part of your nestegg that is able to produce income. It does have cost avoidance aspects in you do not pay rent or mortgage, but is not able to make money to support living expenses like invested assets.

Once you are confident that your expenses are set, including health care (the big unknown potentially), then determine what a safe withdrawal rate is for you. Assuming the nestegg is bigger, you can do lower rate, and corresponding lower risk.

Congrats on building up what you have at your age. I think you are close, and keep up the good work. Welcome to the forum.
__________________
After Monday & Tuesday even the calendar says, W-T-F...

Semi-Retired 7/1/16: working part-time (60%) for now [4/24/16 changed to 80%]
Retired Aug 2, 2017; age 53
38Chevy454 is offline   Reply With Quote
Old 08-18-2014, 05:15 PM   #10
Moderator
Walt34's Avatar
 
Join Date: Dec 2007
Location: Eastern WV Panhandle
Posts: 16,579
Also see this list of questions:

Some Important Questions to Answer Before Asking - Can I Retire?
__________________
I heard the call to do nothing. So I answered it.
Walt34 is online now   Reply With Quote
Old 08-20-2014, 08:02 AM   #11
Thinks s/he gets paid by the post
 
Join Date: Feb 2014
Posts: 1,475
I would work a few more years.

Also, what about college for your kids? And what about healthcare expenses in ER? My son's college expenses ended up being $30k/year. Way more than med school in the 80s. Health insurance premiums alone in ER will run $10K/yr at least.

Have you tracked ALL your expenses?

I agree. You don't have enough yet. Especially with two children. Also, what if you live to be 100?



Sent from my iPhone using Early Retirement Forum
__________________
EastWest Gal is offline   Reply With Quote
Old 08-20-2014, 08:54 AM   #12
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 16,498
Run your situation through Quicken Lifetime Planner (included in Quicken Deluxe and higher if you have Quicken, otherwise well worth the minimal cost of Quicken IMO). QLP is an easy to use retirement planner that you fill in blanks with respect to you, your spouse, your kids, college costs, living expenses, SS, pensions, investment returns, etc and it does a year by year projection of whether your $1.6 million will last for your lifetime. It also has a what-if tool that let's you look at how different changes in assumptions such as lower expenses, working longer, etc affect your ability to retire.

My off-the-cuff thought is that you're probably close and may even be there depending on what your plans are for college for your kids.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
pb4uski is online now   Reply With Quote
Old 09-03-2014, 01:31 PM   #13
Recycles dryer sheets
In-control's Avatar
 
Join Date: Mar 2007
Posts: 319
I would caution using your house as part of your calculation. I do not - I look at it as free $ when we sell in a few years. It is an unknown and does not generate income. You also, esp. w/kids, need a place to live at least 1 yr after college so if you were planning on selling consider that you will still need a place to live.

Also kids and college are expensive. I have three 20 somethings and all of a sudden one may need braces and your dental plan does not cover it. Their goes $5k. Then you need to cover them for car insurance until they get settled. Owe yeah they eat more then most adults as they go thru the teen yrs. etc.... etc....

Just my experience -
__________________
Just Trekking thru!
In-control is offline   Reply With Quote
Old 09-03-2014, 05:03 PM   #14
Thinks s/he gets paid by the post
 
Join Date: Sep 2012
Location: Seattle
Posts: 2,907
Sell your house and rent a smaller house, then you will truly have 1.95m in invested assets and can ignore all of these people who say don't include your house.

1.95m*3% = $58,500

Very easy to live on $58,500 while renting, and a small, energy efficient apartment or house rental will not require any large unforeseen expenses like roof, furnace, etc.

You will likely have SS coming at 62, which could reduce your SWR even lower than 3%.

Retire now.
__________________
Fermion is offline   Reply With Quote
Old 09-03-2014, 09:01 PM   #15
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 welcome View Post
Hello Folks,
This is a great forum and I appreciate all the advise offered by the members.

I have $800k in fixed income (yield 3% annually)
I have $800k in mutual funds and dividend stocks
I have a paid off house $350k.

Net worth $1950k

No debt or mortgage. 2 kids 18 years & 14 years.
Both wife and I are 43 years old

annual house hold income $100k (wages from employer) after tax
annual additional income dividend & fixed income is $51k after tax..

We live a modest life style and was wondering if I can retire?

Annual house hold expense is $36k
I am single, 70+ years old, on Medicare with children grown and established, with net worth including my apartment maybe a couple hundred k less than yours and invested assets equal to yours. Nevertheless many things that I might like to have or do are too expensive for me.

Still. everyone decides his own path, and good luck to you if you make the jump. I hope your wife is easy going. I would guess that anyone who can fund a family with two children on $36,000 could go on the lecture circuit telling others about this.

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 09-04-2014, 07:24 AM   #16
Thinks s/he gets paid by the post
DFW_M5's Avatar
 
Join Date: Sep 2003
Posts: 4,982
Seems to me with your stated income and expenses, if you keep working and living on $36K per year for another ten years and save everything else, you can retire in style at 53 yo.

Also, agree with Ha that you should go on the lecture circuit
__________________
Doing things today that others won't, to do things tomorrow that others can't. Of course I'm referring to workouts, not robbing banks.
DFW_M5 is offline   Reply With Quote
Old 09-04-2014, 07:33 AM   #17
Recycles dryer sheets
In-control's Avatar
 
Join Date: Mar 2007
Posts: 319
Quote:
Originally Posted by Fermion View Post
Sell your house and rent a smaller house, then you will truly have 1.95m in invested assets and can ignore all of these people who say don't include your house.

1.95m*3% = $58,500

Very easy to live on $58,500 while renting, and a small, energy efficient apartment or house rental will not require any large unforeseen expenses like roof, furnace, etc.

You will likely have SS coming at 62, which could reduce your SWR even lower than 3%.

Retire now.
That's a good recommendation. The numbers work esp. when you factor in the ever increasing cost of home maintenance/tax's/insurance. I ran the numbers for our home which we have lived in over 20 yrs, raised a family their. I compared the costs to renting, adjusting for inflation ect... and I would have had >$40K vs the house(w/o mortgage). It also assumes the price was invested with no mortgage and that that $ was in a 60/40 mix of index funds.

Is your SO ok with this thinking? Until recently mine was not and now that the kids are graduated and working, except one, we are on the same page.
__________________
Just Trekking thru!
In-control is offline   Reply With Quote
Old 09-06-2014, 05:51 AM   #18
Thinks s/he gets paid by the post
 
Join Date: May 2014
Location: Utrecht
Posts: 2,213
I'm confused with the sceptics here.

If OP has 1.6M in investable assets and burns through 36k per year, that's effectively 44 years worth of savings.

They'll both be 87 years old when they run out, if they just manage to have a inflation-neutral return. That assumes no SS, not selling the house, unchanged spending habits.

I do agree with 2B however: check if you really will end up at 36k after you retire, specifically with healthcare costs and taxes.

If that part checks out, good to go it seems?
__________________
Totoro is offline   Reply With Quote
Old 09-06-2014, 08:55 AM   #19
Thinks s/he gets paid by the post
DFW_M5's Avatar
 
Join Date: Sep 2003
Posts: 4,982
Not skeptical, but very curious. I would like to know how to live on $36K/year with a family of 4, in a $350K house, and not eat dog food.

Also, the discipline to have a $151K after tax income and be able to limit lifestyle to $36K is amazing. How many on this forum could duplicate that feat?
__________________
Doing things today that others won't, to do things tomorrow that others can't. Of course I'm referring to workouts, not robbing banks.
DFW_M5 is offline   Reply With Quote
Old 09-07-2014, 10:45 AM   #20
Thinks s/he gets paid by the post
 
Join Date: May 2014
Location: Utrecht
Posts: 2,213
I suspect quite a few here do that feat, including myself (roughly).

Expenses excluding housing & healthcare (like OP) for me this year is +/- $15k per annum. That includes $4k from just one expensive travel trip.

Net income this year will be roughly $106k.

I am a renter though, that hacks into my actual savings rate quite a bit (eats up $19k per year).
__________________

__________________
Totoro 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


Similar Threads
Thread Thread Starter Forum Replies Last Post
Can I retire NOW? I can't sleep! What do YOU think? Charlie Delta Hi, I am... 32 08-16-2013 11:54 AM
Can we retire now? How to factor in risk of rental real estate? sunsnow FIRE and Money 25 05-28-2012 09:07 AM
Can we retire now? bellhead FIRE and Money 18 08-05-2011 09:13 PM

 

 
All times are GMT -6. The time now is 02:35 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.