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Old 05-04-2013, 09:35 PM   #21
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Best of luck Nano!
I do agree with Shanky's note though....i am hoping your math works the way you need it to
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Old 05-04-2013, 09:50 PM   #22
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.....Although I made it clear that I was open to some short-term consulting after I ER'd (which is common at that Megacorp), I never got the call. It really brought home that although I took much institutional knowledge out with me, it didn't really matter.

So walk out with your head high and enjoy life after Megacorp!
+1 I kept getting the ol "we don't know what we'll do without you" from colleagues when i was leaving and I kept telling them that they had a bunch of smart folks and that they would figure things out fine. Got one call about a possible consulting gig but that opportunity fizzled away.
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Old 05-04-2013, 11:29 PM   #23
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I took your numbers and put them in Firecalc I used annual spending of 72400 for 4 years, then 102400 for 3 years, 132400 for one year (2 kids in college), then 3 more years at 102400 and then in year 12 went back to 72400

I started with a portfolio of 655000, with a 45 year retirement. SS 21500 in 2025, 10750 (half of yours) in 2027 with 38500 inflation adjusted pension in 2013 and 17000 pension with no COLA in 2028.

I kept investments as defaults. I got a success rate of 83.3%.

I didn't put in anything for the $150,000 equity from your house since you said you might put it in your new house. Also from having bought a house last year and moved about 60 miles there are a lot of one time expenses the year you move. There are expenses for the move itself and usually there is work you want to do to the new house, you may need to buy some different furniture that will work better in the new house, may need to build a fence, etc.

If I change year 12 to $50,000 spending I get 88.5%.

Of course, you may not spend $30k a year for kids for college. I have a son in college and his costs are way less than that as he went to CC for awhile and will be transferring to a state university close to our home so he can live at home. Even if he was in a dorm the cost would be closer to $20k a year than $30k.

Also, with kids the age of yours it remains to be seen what they will want to be doing 4 to 7 years from now. For example, my daughter doesn't want to do a 4 year program and wants to do a 2 year program. On the other hand, my son is going to take more than 4 years to graduate.

If I add back in $100,000 of your house equity to the portfolio then I get 95.8% with reduced spending of $50,000 in year 12. With spending of $72,400 in year 12 and after and the extra $100,000 in the portfolio - I get 92.7%.

You also need to go to investigate and ask for data in spreadsheet format. When you do that, you should make note of any cycles were you fully deplete your taxable account before you are 59.5.

I may not be inputting your numbers correctly, as I was just basing on your original post, so this is more just something to look at.
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Old 05-05-2013, 05:26 AM   #24
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I took your numbers and put them in Firecalc I used annual spending of 72400 for 4 years, then 102400 for 3 years, 132400 for one year (2 kids in college), then 3 more years at 102400 and then in year 12 went back to 72400

I started with a portfolio of 655000, with a 45 year retirement. SS 21500 in 2025, 10750 (half of yours) in 2027 with 38500 inflation adjusted pension in 2013 and 17000 pension with no COLA in 2028.

I kept investments as defaults. I got a success rate of 83.3%.
Thanks very much for checking my analysis Katsmeow. The only difference I have is the initial amount will be 770,000 of which 310,000 is currently in tax-deferred accounts. The 770K is after 65K down on a new 325K home and 15K set aside for the move (moving van, gas, etc). I've already had the discussion with DW about new furniture and setting up the new homestead. We agreed we can't go crazy on the decorating and really need to get a "turn-key" property.

When I run FIRECalc, I use the Bernicke reduction factor as I'm comfortable with scaling back expenses as I get into my older years. FIRECalc does this a little bit early, but I use a 1.5% reduction starting at age 70 in ESPlanner.

ESPlanner is my primary decision tool and it gives me 34K of annual discretionary spending per household member. This is spending after taxes, home expenses (PITI) and college. We have lived on 22K/member for the past 3 years in preparation for this decision and we are very comfortable with our spending and don't feel at all deprived. As a bonus the 34K assumes only 1/2 mean real return on specific portfolio allocation. So in our case, the 34K is a "Cautious" spending level.

Again, I do appreciate you looking more deeply into my numbers as one can never be too sure you're not putting garbage in and getting garbage out of these calculators.

Finally, my military retirement is $3205/month. We will transfer the same amount monthly from VG giving us $6410/month net. I used paycheck city.com to calculate what Gross salary this transfers to and it is $93K/year. This is a pretty good salary for the area we are moving to. I trust it will all work out.

Thanks again,


Nano
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Old 05-07-2013, 01:01 PM   #25
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Notified employer yesterday of my resignation. My boss was very supportive of my decision which was no surprise as he's been a linchpin to my success during my entire time of Megacorp. I feel pretty fortunate as I'm sure most will not miss their boss after ER. However, I must say, I will.

Hit a small bump today when I went to get a pre-approval for a mortgage. Had to put 50% down as they would not consider assets and only income in which I'll be at the military retirement of $38,500. Qualified me for $162,500 at 3.25%. Not what I wanted as we were planning to put down just 20% to avoid PMI. According to ESPlanner, the additional 30% down will cost us approximately $5K annually in our discretionary spending budget. Oh well, I'm sure there will be many more bumps along the way.

Good news is we decided to go with PODS for the cross country household move. Too many horror stories on the net about the big mover such as Allied and United. So we'll pack it and load it onto a locked POD and let them store it on the other end until we have a new home ready for delivery.

Next hurdle is the home inspection on our current home which should be this week.
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Old 05-07-2013, 01:52 PM   #26
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Notified employer yesterday of my resignation.

Hit a small bump today when I went to get a pre-approval for a mortgage. Had to put 50% down as they would not consider assets and only income in which I'll be at the military retirement of $38,500. Qualified me for $162,500 at 3.25%. Not what I wanted as we were planning to put down just 20% to avoid PMI. According to ESPlanner, the additional 30% down will cost us approximately $5K annually in our discretionary spending budget. Oh well, I'm sure there will be many more bumps along the way.
Re: For your next mortgage, you may want to shop around a bit. We have found that lenders don't accpet our paying ourselves out of our regular savings account--that is just asset depletion.

However, once DH put in the paperwork to make distributions from the tIRA and got the first payment into the checking account, things changed,
as long as the account shows that those distributions can continue for 3 years.

I can't recall whether your pension-matching VG funds have already been taxed or whether they are from your as-yet-untaxed retirement funds, but consider your sources. The lenders want you to be drawing funds out of retirement accounts in a regular income stream and paying the taxes on those funds.
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Old 05-07-2013, 02:07 PM   #27
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R
I can't recall whether your pension-matching VG funds have already been taxed or whether they are from your as-yet-untaxed retirement funds, but consider your sources. The lenders want you to be drawing funds out of retirement accounts in a regular income stream and paying the taxes on those funds.
The VG funds are after tax. Why would it be important to by paying taxes on the funds that you are withdrawing from? Seems odd.
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Old 05-07-2013, 02:11 PM   #28
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The VG funds are after tax. Why would it be important to by paying taxes on the funds that you are withdrawing from? Seems odd.
I have no idea why they make the distinction, but they do. We learned that 72(t)s work the same way.
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Old 05-07-2013, 05:01 PM   #29
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Hit a small bump today when I went to get a pre-approval for a mortgage. Had to put 50% down as they would not consider assets and only income in which I'll be at the military retirement of $38,500. Qualified me for $162,500 at 3.25%. Not what I wanted as we were planning to put down just 20% to avoid PMI. According to ESPlanner, the additional 30% down will cost us approximately $5K annually in our discretionary spending budget. Oh well, I'm sure there will be many more bumps along the way.
Not sure how helpful this would be at your age. However, you might want to look up and ask about asset depletion mortgages.
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Old 05-07-2013, 05:21 PM   #30
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Hit a small bump today when I went to get a pre-approval for a mortgage. Had to put 50% down as they would not consider assets and only income in which I'll be at the military retirement of $38,500. Qualified me for $162,500 at 3.25%. Not what I wanted as we were planning to put down just 20% to avoid PMI. According to ESPlanner, the additional 30% down will cost us approximately $5K annually in our discretionary spending budget. Oh well, I'm sure there will be many more bumps along the way.
I was going to mention getting the mortgage while you're still employed. I've had a heck of a time refinancing as a retiree living off assets, especially since I'm working the income so as to keep myself in a low tax bracket for cap gains breaks and Roth converisons. Even though I can easily afford to pay off the mortgage at any time, and even though refinancing will just make it that much easier to make the lower payments, if I don't have a big enough income they won't lend to me.

However, you're currently still employed, aren't you? All they are going to ask for is past tax statements, maybe a recent paystub. Your bump in the road might be a case of too much information. I don't see any reason to mention you are retiring soon, or just did, or whatever. You're not scamming them into giving you anything you can't afford, so just giving them what they ask for and not mentioning the immediate future is just a way to grease the skids. I'd try again with another company and see how it works.
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Old 05-07-2013, 05:24 PM   #31
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Not sure how helpful this would be at your age. However, you might want to look up and ask about asset depletion mortgages.
Asset depletion mortgages tend to have significantly higher rates (1% or more) than standard mortgages. I tried that when I was having problems getting a refi. Same with smaller local banks. Basically, if the mortgage can't be sold to Fannie/Freddie, the rate is higher. At least in my experience in MD and VA.
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Old 05-07-2013, 05:29 PM   #32
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Asset depletion mortgages tend to have significantly higher rates (1% or more) than standard mortgages. I tried that when I was having problems getting a refi. Same with smaller local banks. Basically, if the mortgage can't be sold to Fannie/Freddie, the rate is higher. At least in my experience in MD and VA.
I am not talking about a mortgage that can't be sold to Fannie/Freddie. The asset depletion loans I was looking at could be sold. We didn't end up doing it, but I'm sure the OP can do a search for asset depletion mortgage and find out a lot (or talk to a mortgage broker).
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Old 05-07-2013, 06:40 PM   #33
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Not sure how helpful this would be at your age. However, you might want to look up and ask about asset depletion mortgages.
Thanks for the suggestion. I'd never heard of them, but now am familiar. I spoke to a broker today and looks like we should be able to get to the 20% down.

I will say I don't like all these mortgage companies wanting to pull my credit. Afraid it will have a negative impact on the score. I get conflicting information about that.
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Old 05-07-2013, 11:18 PM   #34
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I will say I don't like all these mortgage companies wanting to pull my credit. Afraid it will have a negative impact on the score. I get conflicting information about that.
Those within a certain period of time are treated as one inquiry.

Credit Report Inquiries: How Credit Checks Affect Your Credit Score
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Old 05-08-2013, 09:59 AM   #35
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I was going to mention getting the mortgage while you're still employed.

However, you're currently still employed, aren't you? All they are going to ask for is past tax statements, maybe a recent paystub. Your bump in the road might be a case of too much information. I don't see any reason to mention you are retiring soon, or just did, or whatever. You're not scamming them into giving you anything you can't afford, so just giving them what they ask for and not mentioning the immediate future is just a way to grease the skids. I'd try again with another company and see how it works.
They also ask what is the purpose of the loan. Primary residence or second home? Since NanoSour is buying a primary residence in a new area, IIRC, then his current job income would not help him, unless the new area is within reasonable commuting distance or otherwise explained.
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Old 05-08-2013, 04:40 PM   #36
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Well just got call from the Mortgage broker who yesterday said we could do 20%. Today she says, yes, but at 4.75% rate.

Not happy today. But could be worst.
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Old 05-08-2013, 04:48 PM   #37
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I took your numbers and put them in Firecalc I used annual spending of 72400 for 4 years, then 102400 for 3 years, 132400 for one year (2 kids in college), then 3 more years at 102400 and then in year 12 went back to 72400
Kat, how were you able to break up this spending into groups using FIRECalc?

I can't see how this is done.
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Old 05-09-2013, 09:31 AM   #38
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Kat, how were you able to break up this spending into groups using FIRECalc?

I can't see how this is done.
Not Katsmeow - but I'll answer.

You can modify the income streams with the pension/off chart spending categories on the 2nd tab, towards the bottom.

For example - I include our spending for the near term, that includes $12k/year going into the 529's. (kids are 6th grade and 4th gradel age now) That's the number I put on the first page for spending. I show a non-cola'd pension coming online at the time my youngest turns 22 of $12k/year. Basically, I'm using a virtual pension to replace spending that is going away.

There may be other ways to do it - but that's how I handled it when I was modeling it.
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Old 05-09-2013, 10:08 AM   #39
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Kat, how were you able to break up this spending into groups using FIRECalc?

I can't see how this is done.
You also make a donation and be given the ability to enter annual spending amounts if you need more options then the basic calculator gives you.
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Old 05-09-2013, 10:24 AM   #40
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You also make a donation and be given the ability to enter annual spending amounts if you need more options then the basic calculator gives you.
I thought I knew FIRECalc pretty well, but I don't see where to make a donation or annual spending amounts.
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