Coming up with THE NUMBER

[Lisa99]

It seems DH isn't too keen on the date September 1, 2016 as the retirement date answer. Instead he's challenged me to come up with the number and when we hit it we bail.

In 2016 I'll be 55 and Steve will be 51, which before I found this site would have seemed super early to retire. The wild card of course is healthcare insurance costs.

He can be Pollyanna and simply telling him about our great progress since ditching Ameriprise has him chomping at the bits to retire. So we'll see where the middle ground will be in my 100% number versus his 75% is close enough.

 

[TheWizard]

So, how can we help?

 

[Lisa99]

So, how can we help?

No help needed in running the scenarios and the results were no surprise. I guess I just need a bit of spousal therapy help today.

I'm frustrated that until I took over the investments from Ameriprise he assumed he'd work until 65. Now that I've been sharing with him our progress he's sprung too far the other way and it makes me uncomfortable.

So I guess I do have a question. How do you compromise on such a critical aspect like when to quit work?

I'm a worry wort about money, he's not. And in fact he's said that if he has to work as a WalMart greeter at some point he'd be ok with it as long as he had fun while he was healthy.

The thought of HAVING to work when I'm old and tired gives me the heebee geebees (although I already have the backstop plan in place with buying an SPIA if we start running short).

 

[flyfishnevada]

There are other ways to avoid being a greeter at Wal-mart, like cutting back on spending. Do that now instead of when you "need" to and it might make a big difference. It wouldn't take much, I'd think, and maybe you've already thought of it. I just see a lot of people worry about just one side of the ledger.

Beyond that, nothing is ever for sure. You're 100% number is a projection based on certain assumptions. If those assumptions never come to pass, you'll wonder why you waited so long. If things turn out worse, you might regret. Or like a lot of us say on here, figuring out how to stay retired is our new job. Lifestyle and spending adjust when income goes up, but it works the other way too.

I guess you gotta figure out if a theoretical 100% number is more important than retiring earlier. You've even got the SPIA in place as a back up. Sounds like your DH considers retirement the priority. I bet there's a compromise in there and you've got a few years to adjust for it.

 

[Animorph]

I liked using a number better than a date. Just build in a margin of safety that you feel comfortable with. Nothing that says it can't be what you expected to have by working until Sept 2016. If you hit it early, so much the better, as long as you're not waiting for a step in the pension or retiree health benefits. In my case I had the opposite problem. I retired, but DW didn't want to. Not that I'm complaining.

 

[pb4uski]

Since you're the (self described) worry wart, why don't you define a number that you can be comfortable with and once you've hit it, turn in your papers. It sounds like he will go along with whatever you decide.

Having a defined number will also help you avoid one more year syndrome.

It doesn't necessarily need to be the amount of the nestegg, but might be the success rate using Firecalc of some other analytical tool you have confidence in, or a target withdrawal rate.

Good luck.

 

[2B]

So I guess I do have a question. How do you compromise on such a critical aspect like when to quit work?

I'm a worry wort about money, he's not. And in fact he's said that if he has to work as a WalMart greeter at some point he'd be ok with it as long as he had fun while he was healthy.

The thought of HAVING to work when I'm old and tired gives me the heebee geebees (although I already have the backstop plan in place with buying an SPIA if we start running short).

Ah, THE NUMBER! I could make all sorts of jokes about this but it's a reasonable question worthy of a reasonable answer. Basically, THE NUMBER is an illusion. What you need to know is how much cash flow you need. Using our often used SWR only gives an estimate without knowing what the actual portfolio returns will be. So, the "classical" answer is for your ages is to take your living expenses and divide by O.035 and you will have approximately THE NUMBER you seek. Since you are looking at a future retirement date, THE NUMBER needs to get raised for any expected inflation.

I see by your later post that your DH is the "free spirit." Since he is looking for "fun" when he retires, you will need to budget this into your calculations. If he's planning a world tour, you'll need to add a bundle to it. As your unlicensed, untrained marriage counselor, I suggest you nail down his "wants" before you give him THE NUMBER.

A compromise is to possibly let him have "fun" while still working. You two can make a list together of what you'd like to do now and in retirement. You probably have vacation time so you can do some of the things on your own personal "bucket list" while still employed.

Unless you are really low paid, it makes a lot for financial sense to work an extra year to build cash than to plan on getting a minimum wage job. I knew one guy that did that and he complained bitterly about his decision. That low stress retail job he though he was getting turned out to be a bigger headache than he bargained for.

 

[donheff]

I think your carefree husband is correct. A date specific implies building your ER lifestyle around a portfolio number that is arrived at through happenstance. But it seems to me that there is a magic number that can be derived for each individual. That number varies based on all the usual suspects - risk profile, portfolio composition, withdrawal strategy, etc. The key factor is identifying your desired income flow (i.e. your expenses) and then determining how you want to approach withdawals and portfolio composition. Once you figure that out you will arrive at the appropriate multiplier (whether it is 2B's .035, or the standard .04). Since DH is leaving things up to you you can ignore his number (he is accepting yours) and calculate your own based on your worry wart nature. Unfortunately for DH, that may end up taking you out beyond 2016.

 

[2B]

Once you figure that out you will arrive at the appropriate multiplier (whether it is 2B's .035, or the standard .04).

I lowered it based on their age. I didn't point out that she should also include pensions and SS but she said she really didn't need help with FIRECalc.

 

[MichaelB]

No help needed in running the scenarios and the results were no surprise. I guess I just need a bit of spousal therapy help today.

I'm frustrated that until I took over the investments from Ameriprise he assumed he'd work until 65. Now that I've been sharing with him our progress he's sprung too far the other way and it makes me uncomfortable.

So I guess I do have a question. How do you compromise on such a critical aspect like when to quit work?

I'm a worry wort about money, he's not. And in fact he's said that if he has to work as a WalMart greeter at some point he'd be ok with it as long as he had fun while he was healthy.

The thought of HAVING to work when I'm old and tired gives me the heebee geebees (although I already have the backstop plan in place with buying an SPIA if we start running short).

Not all differences can be resolved with compromise, and the math doesn't fully address every concern. Instead of focusing on a number and a date can you develop a viable "plan B". Try to realistically express things that could go wrong and what options you have to respond. It's not just "success or Wal-Mart". That said, you need to have a minimum set of conditions that you can live with, and this is non-negotiable.

 

[2B]

I'm frustrated that until I took over the investments from Ameriprise he assumed he'd work until 65. Now that I've been sharing with him our progress he's sprung too far the other way and it makes me uncomfortable.

I was remiss in not complimenting you for getting rid of Ameriprise. That probably did as much to speed you onto ER as any other action. It's amazing how much money they can suck out of you while putting you in crappy investments.

It takes a little while for the excitement of "I can really retire early" to sink in. You've already come to the realization that it needs to be planned carefully. I suspect that he'll come around even if you're the nerd and he's the free spirit. You two need to talk about the specifics and also your concerns.

 

[EvrClrx311]

So I guess I do have a question. How do you compromise on such a critical aspect like when to quit work?

DW and I are still 15+ years away from ER... but comparing this to similar other financial discussions we've had and what works for us, my advice would be to try and propose: We won't pull the trigger until we are both comfortable with the number/figures.

Then you are protected from the wild swings you're referring to. The importance of having enough, and no regrets later certainly makes it understandable that you'd feel uncomfortable with any impulsive behavior as you get closer to the big R.

Your situation reminds me a lot of DW and I deciding when to have our first child... we were married for about a year (mid 20s) when DW started to press the issue about making it sooner than the 'lets wait until we've been married 3 years before we have kids'... she seemed to worry that we might wait too long and miss our opportunity to have a child at just the right time.

Suddenly after we'd been married for 2.5 years I switched almost instantly from a "lets wait until we get to 3 years"... to "ok, I'm ready, lets do this!"

It caught her off guard to the point where she suddenly started to question if it were too soon. Funny how that works

 

[Midpack]

No help needed in running the scenarios and the results were no surprise. I guess I just need a bit of spousal therapy help today.

So I guess I do have a question. How do you compromise on such a critical aspect like when to quit work?

Why do you need to retire at the same time? Maybe the compromise is one of you will continue to work longer than the other. Eventually both will retire, but there are certainly people here with one spouse retired and the other working. I'm retired, my DW still enjoys here job, and having her health care is very helpful. Now what we planned, but it's worked out well. And I may go back to work while or after DW retires, who knows.

You can retire when you hit a number or a date, there's no right answer any more than there's one right number, too many variables and uncertainties. Just for example, people with FIRECALC 100% success rates will meet failure in time, and presumably half the people with 50% success rates will do fine. Add in adjusting to results during retirement and plan B's, as actually happens, and success is even more likely. The number is just whatever $ nest egg allows you to sleep at night given the uncertainties, your plan B, etc.

Some will disagree, but what's more important than a number or a date, and that's what you're retiring to? "It's not enough to retire from something, you should have something to retire to." Many people are so focused on ending work and that's fine, but they don't spend much time thinking about what they'd rather be doing. Some people can move into retirement without any real plans, but some struggle with the change - even find it boring. It's just worth a little reflection IMO...

Best of luck...

 

[Bikerdude]

He can be Pollyanna and simply telling him about our great progress since ditching Ameriprise has him chomping at the bits to retire. So we'll see where the middle ground will be in my 100% number versus his 75% is close enough.

Add 25% to your number and let him cut it to 75 or 80%, then retire.

 

[Lisa99]

Thank you everyone for your insightful responses.

I know the income we need in retirement based on our current spending habits, which I've been tracking since joining this board.

For retirement planning, we have a bare bones budget and full budget that includes extensive travel. We can swing anywhere between the two depending on how our investments are doing. What I haven't done yet is a financial plan that will tell me specifically where the income will come from (I have a very small pension and we're retiring years before SS will kick in, so I have to determine the income flow).

So the "number" that I calculated in Firecalc is based on the travel included budget (both the bare bones and fully loaded budget includes $1k/month in healthcare costs which I won't know until closer to retirement if it's enough).

Our combined income today is sufficient to travel a lot. We're going to Hawaii in the fall for 15 days and to New Zealand next year, so we aren't waiting to retire to have fun.

And we know we want to retire together, so having one continuing working isn't an option. We plan to move across the country to an active adult community and already have so much on the to do list (playing cricket, learning bridge, joining a theater group, joining a pickleball league, blah, blah) that if one retired without the other we'd have to arm wrestle to see who has to stay in jail.

As I've been writing and thinking about the topic in-depth, I've just realized what I'm really afraid of. I don't want to become the money nag. Today, even though we put all of one income and part of the other into our investments, we still have enough money to do whatever we want within reason.

I'm worried that when we really do have to stick to a budget (and that twice yearly big *ss bonus no longer exists) that every time an Amazon box shows up at the door I'll get upset about yet another purchase.

WOW, what a eureka moment. And to think you guys helped me get to that realization for FREE! We now have something concrete we can talk through rather than "Lisa - there isn't enough money in the world that would make you feel comfortable"...which I have been told many times.

 

[Nords]

So I guess I do have a question. How do you compromise on such a critical aspect like when to quit work?

Since you're the (self described) worry wart, why don't you define a number that you can be comfortable with and once you've hit it, turn in your papers. It sounds like he will go along with whatever you decide.

Better still, it sounds as if you're in charge of the data, so you get to pick the number. If he objects then he should be ready to do his own math.

I don't want to become the money nag.

In that case I'd suggest a monthly spending amount for each of you, transferred into separate checking accounts at the beginning of the month. The funds can be spent for whatever, no questions asked. That way he's free to save up his monthly allowance for a really big prize, or to put it on his credit card and pay the interest charges until he earns enough of his own income to pay it off...

 

[donheff]

As I've been writing and thinking about the topic in-depth, I've just realized what I'm really afraid of. I don't want to become the money nag.

In that case I'd suggest a monthly spending amount for each of you, transferred into separate checking accounts at the beginning of the month. The funds can be spent for whatever, no questions asked.

+1 That is a simple and great solution. Of course, if you are a money worry wart you might find your personal account building up while hubby's hovers near $0. Then you might feel guilty not tossing some extra his way for a splurge.

 

[grasshopper]

(playing cricket, learning bridge, joining a theater group, joining a pickleball league, blah, blah)

Pickleball, on this forum you learn something new everyday.

 

[Lisa99]

In that case I'd suggest a monthly spending amount for each of you, transferred into separate checking accounts at the beginning of the month. The funds can be spent for whatever, no questions asked. That way he's free to save up his monthly allowance for a really big prize, or to put it on his credit card and pay the interest charges until he earns enough of his own income to pay it off...

Funny, we do this today. We each get XX/month that goes into a separate checking acct to be spent as we wish.

Yet he STILL buys stuff on Amazon using the house account without asking. I raise cain periodically, he stops for awhile then starts up again. His thought is 'we have plenty of money, what's the big deal'.

I shared this thread with him yesterday and he now understands what the big deal is. Until he gets his shopping addiction under control I'm not comfortable retiring.

 

[ziggy29]

Pickleball, on this forum you learn something new everyday.

I was wondering if that was anything like Calvinball.

 

[grasshopper]

I was wondering if that was anything like Calvinball.

Note to self Google Calvinball.

 

[aida2003]

Ah, THE NUMBER! I could make all sorts of jokes about this but it's a reasonable question worthy of a reasonable answer. Basically, THE NUMBER is an illusion. What you need to know is how much cash flow you need. Using our often used SWR only gives an estimate without knowing what the actual portfolio returns will be. So, the "classical" answer is for your ages is to take your living expenses and divide by O.035 and you will have approximately THE NUMBER you seek. Since you are looking at a future retirement date, THE NUMBER needs to get raised for any expected inflation.

I always get lost when I read about THE NUMBER and especially how younger couples still raising small children can guestimate it.
Living expenses? Is it expenses today or is it estimated expenses in today's dollars after the kids are out, or estimated expenses of the first year in retirement in today's dollars?
And after dividing expenses by 0.035 or 0.4, does the NUMBER still contain the principal to be left behind or will it be used up by the end?
There're threads here in which people express wishes/plans to retire in the forties. I'd say 3.5% is too agressive for them, right?

I sometimes read people talking in future dollars, others in today's dollars, and in the end I'm lost. Maybe by the time I can foresee my retirement I'll figure it out.

 

[ziggy29]

Note to self Google Calvinball.

Heh -- I thought everyone knew knew Calvinball...

Calvinball - The Calvin and Hobbes Wiki

 

[rescueme]

Yet he STILL buys stuff on Amazon using the house account without asking.

Sorry, but IMHO you have much deeper problems as related to money and how it is applied to your joint lifestyle.

I have comments, but I'll withold them (based upon "input" of your postings).

Let's just say, that I wish you well...

 

[ziggy29]

His thought is 'we have plenty of money, what's the big deal'.

To some degree we're like that -- but only up to a point. As long as our saving and investing goals of $X each month are met, I'm happy. Sometimes if we spend less, we'll put in a lot more than $X. If we spend more, it'll be only a little more than $X. For us it's a nice compromise between making sure we are making sufficient progress every month without obsessing over where every dollar went.

YMMV, naturally...