Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Decision in One Month
Old 02-26-2013, 08:10 AM   #1
Full time employment: Posting here.
 
Join Date: Jan 2008
Posts: 609
Decision in One Month

Looks like we're coming down to the wire with our decision to ER or not. There is such great knowledge here, I thought I'd lay it all out there and get thoughts from the community. I've run so many calculators and calculations my head is spinning and if anyone is willing to run my numbers through their favorite calculator as a backup, I'd appreciate the sanity check.

By way of background information, I'm 50, DW 48. I'm a mid-level manager and she's a SAHM. Two children, ages 11 and 14. The oldest will be starting high school this coming fall and this is the primary reason we believe the decision must be made be 1 Apr and our house listed for a planned move on 1 July. If I ER, we will be relocating a significant distance to a tax-free state. (Income tax this is)

Here are the numbers:

Last 3 years Annual Spending: $72,360

Taxable Accts: 360K
401K: 250K
Roth IRA: 28K
Trad IRA: 17K
Home Equity: 150K (will sell and possibly roll over to new home)
Age 62 SS: 21.5K
DW SS 62 10K
Age 65 Pension: 17K (non COLA)
Gov't Pension: 38.5K (COLA, currently receive)
HC: Retired Military HC

With all this information the calculators show the following annual spending results:

Financial Engines: 90.6K
FIRECalc: 91.6K (99% Prob or success., Bernicke reduction)
ESPlanner: 95K (includes 30K/year college per child)

I've run the other calculators also; ORP, Flex Planner and the results are all the in the ballpark. They all point to exceeding our current spending by a pretty good margin. At least I think that is a good margin.

I guess my question is would one feel comfortable enough with the calculated projections to walk away?

It's tough to overcome the OMY syndrome, which for me will most likely be 5 more years as I actually like the job and will go to 55 if we stay.

Thanks for your thoughts....Nano
__________________

__________________
NanoSour 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 02-26-2013, 08:47 AM   #2
gone traveling
 
Join Date: May 2012
Location: Fairfax, VA
Posts: 211
Quote:
Originally Posted by NanoSour View Post
I guess my question is would one feel comfortable enough with the calculated projections to walk away?

It's tough to overcome the OMY syndrome, which for me will most likely be 5 more years as I actually like the job and will go to 55 if we stay.
I'm far from the point of retiring, but these key factors stand out for me:

- You have Military HC
- You have a COLA'd pension representing half your current expenses
- All of your 99% success scenarios are for incomes listed 25-30% higher than your current income (quite a nice cushion).

Whether or not you want to uproot your kids as they go into HS is a personal decision, but it sticks out to me. If you like your job so much, maybe you can proposition them for 50% FT work?

Either way, I'd certainly take the jump if I were you.
__________________

__________________
bo_knows is offline   Reply With Quote
Old 02-26-2013, 11:11 AM   #3
Moderator
rodi's Avatar
 
Join Date: Apr 2012
Location: San Diego
Posts: 8,802
Once you hit 62 - you're at close to your current spending.
and at 65 - you have extra. (Not inflation adjusted for some of it.)

You have 10 years of current spending shortfall in your taxable accounts. (since you already have a 38.5k pension coming in.) That will bring you up to age 59.5.

You can then tap the almost 300k in the IRAs/401ks to cover till you turn 62 and SS comes online.

this assumes no market growth and no inflation... Chances are that market growth will exceed inflation... but there are no guarantees.

Once you're 65 you're good... plus your kids should be launched by then.

The only thing that gives me pause is the planned move. What if you hate the place you move?

Moving kids in high school is rough on them. So I agree that you should do it now (before he/she starts high school) or wait till the younger one is out of high school.

Is the only reason you're moving the state income taxes? Moves are expensive... some of your income going forward is likely to be tax free (depending on the state). I'd really look hard at whether a move is worth it IF the only reason is taxes.
__________________
rodi is offline   Reply With Quote
Old 02-26-2013, 11:39 AM   #4
Full time employment: Posting here.
 
Join Date: Jan 2008
Posts: 609
Quote:
Originally Posted by rodi View Post
The only thing that gives me pause is the planned move. What if you hate the place you move?

Moving kids in high school is rough on them. So I agree that you should do it now (before he/she starts high school) or wait till the younger one is out of high school.

Is the only reason you're moving the state income taxes? Moves are expensive... some of your income going forward is likely to be tax free (depending on the state). I'd really look hard at whether a move is worth it IF the only reason is taxes.
Good questions. We agree that we don't want to move once the kids start high school. The move is to a place we know well and have family nearby, but not too close.

We know that we want to eventually end up in this area, but if we stay here and the kids finish HS/College here, then the chances of ever moving will be pretty slim. I hate to say that as we know one can always move once retired. However, realistically, if this is the children's home, we most likely won't just pick up and move. At least not without much consternation.

We are approaching it as a "now or never" decision.

Again, what I'm really looking for is what level of faith do folks have in all these calculators when faced with the real-life decision point.
__________________
NanoSour is offline   Reply With Quote
Old 02-26-2013, 05:27 PM   #5
Moderator
MBAustin's Avatar
 
Join Date: Jul 2010
Posts: 4,148
Would it help you make the jump to have a backup plan of PT w*rk options ready? Some ideas here (there may be other threads as well...I just remembered this one)
Finding part-time work after ER - difficulty?
__________________
"One of the funny things about the stock market is that every time one person buys, another sells, and both think they are astute." William Feather
----------------------------------
ER'd Oct. 2010 at 53. Life is good.
MBAustin is offline   Reply With Quote
Old 02-26-2013, 05:38 PM   #6
Thinks s/he gets paid by the post
Live And Learn's Avatar
 
Join Date: Feb 2012
Location: Tampa Bay Area
Posts: 1,688
Personally I think the Bernicke reduction gives too rosy a picture. Have you tried FIRECALC using an offchart spending reduction for when the kids are launced and also use constant spending power ?

I think you'll find that the numbers work anyway but its another good check.

You may also want to evalute if the 72.5k in spending is going to go up as the kids get older. Also don't see any funding for kids college. I worked my way through college so I know its possible so if that is what you are thinking then that works too !
__________________
"For the time being no discipline brings joy, but seems grievous and painful; but afterwards it yields a peaceable fruit of righteousness to those who have been trained by it." ~
Hebrews 12:11

ER'd in June 2015 at age 52. Initial WR 3%. 50/40/10 (Equity/Bond/Short Term) AA.
Live And Learn is offline   Reply With Quote
Old 02-26-2013, 05:47 PM   #7
Thinks s/he gets paid by the post
Live And Learn's Avatar
 
Join Date: Feb 2012
Location: Tampa Bay Area
Posts: 1,688
Quote:
Originally Posted by NanoSour View Post
It's tough to overcome the OMY syndrome, which for me will most likely be 5 more years as I actually like the job and will go to 55 if we stay.
You are so fortunate to like your job ! Be thankful. I know how hard it is to make these decisions but your numbers look alot better than mine. In your situation, based upon the success rates you posted, I'd be gone tomorrow ! (but then again - I really DON'T like my job !!!)
__________________
"For the time being no discipline brings joy, but seems grievous and painful; but afterwards it yields a peaceable fruit of righteousness to those who have been trained by it." ~
Hebrews 12:11

ER'd in June 2015 at age 52. Initial WR 3%. 50/40/10 (Equity/Bond/Short Term) AA.
Live And Learn is offline   Reply With Quote
Old 02-26-2013, 05:47 PM   #8
Full time employment: Posting here.
 
Join Date: Jan 2008
Posts: 609
Quote:
Originally Posted by MBAustin View Post
Would it help you make the jump to have a backup plan of PT w*rk options ready? Some ideas here (there may be other threads as well...I just remembered this one)
Finding part-time work after ER - difficulty?
PT/FT return to the workforce is always Plan B. Hopefully it doesn't come to that option.
__________________
NanoSour is offline   Reply With Quote
Old 02-26-2013, 05:51 PM   #9
Thinks s/he gets paid by the post
obgyn65's Avatar
 
Join Date: Sep 2010
Location: midwestern city
Posts: 4,061
I would wait a few more months, until the calculators say 100%. I am sorry.
__________________
Very conservative with investments. Not ER'd yet, 48 years old. Please do not take anything I write or imply as legal, financial or medical advice directed to you. Contact your own financial advisor, healthcare provider, or attorney for financial, medical and legal advice.
obgyn65 is offline   Reply With Quote
Old 02-26-2013, 05:55 PM   #10
Full time employment: Posting here.
 
Join Date: Jan 2008
Posts: 609
Quote:
Originally Posted by Live And Learn View Post
Personally I think the Bernicke reduction gives too rosy a picture. Have you tried FIRECALC using an offchart spending reduction for when the kids are launced and also use constant spending power ?
I purchased ESPlanner Plus ($199) about a month ago and have run the numbers with $30/year for each child's college. That's a total of $240K over 7 years. ESP factored all that in in today's dollars and still spit out discretionary spending of over $74K given 1/2 mean returns for our portfolio. I'm as surprised as any about these numbers.

I've found ESP to be very useful in my planning, but a little hard to swallow, i.e. believe the numbers. The $74K is after housing, taxes, and college expenses.

I must quantify that the $74K spending is for the household, which is 2 Adults/2 children. This number will go down when the children have left the roost at 22.
__________________
NanoSour is offline   Reply With Quote
Old 02-26-2013, 05:57 PM   #11
Full time employment: Posting here.
 
Join Date: Jan 2008
Posts: 609
Quote:
Originally Posted by obgyn65 View Post
I would wait a few more months, until the calculators say 100%. I am sorry.
All the calculators say 100% is easily doable for my current spending level of $72K. I chose the 99% on FIRECalc just to see how it compared to the others.
__________________
NanoSour is offline   Reply With Quote
Old 02-26-2013, 06:08 PM   #12
Thinks s/he gets paid by the post
obgyn65's Avatar
 
Join Date: Sep 2010
Location: midwestern city
Posts: 4,061
Then I say good to go ! :-)
Quote:
Originally Posted by NanoSour View Post

All the calculators say 100% is easily doable for my current spending level of $72K. I chose the 99% on FIRECalc just to see how it compared to the others.
__________________
Very conservative with investments. Not ER'd yet, 48 years old. Please do not take anything I write or imply as legal, financial or medical advice directed to you. Contact your own financial advisor, healthcare provider, or attorney for financial, medical and legal advice.
obgyn65 is offline   Reply With Quote
Old 02-26-2013, 06:45 PM   #13
Thinks s/he gets paid by the post
 
Join Date: Nov 2006
Posts: 2,268
As someone said, moving while the kids are in HS is a personal decision, but personally I don't think its that big of a deal. I moved every 2 years from age 6 to about 17 and I think all it did was make me learn to be more independent and be able to adjust to things better. I say better to learn some lessons now instead of later.

We will be retiring and moving between my son's sophomore and junior years which is less than 2 years away and he's fine with it. New friends, new experiences.

Having said that, I think you are good to go right now.
__________________
utrecht is offline   Reply With Quote
Old 04-30-2013, 04:33 AM   #14
Full time employment: Posting here.
 
Join Date: Jan 2008
Posts: 609
Time for an update on our decision.

Although, a couple weeks behind schedule, we decided to put our house on the market. I still have yet to notify Megacorp which will be quite a surprise for them. We'll wait to get a solid offer on the house before I let them know.

Our plan is to make the move mid July if everything goes well. I'm surprised how difficult and emotional this decision is/was, and at times, DW and I are not sure we're doing the right thing. But, we figure it's a win no matter what happens which gives us some comfort.

I will say I'm very apprehensive about my upcoming discussion with my boss. I suspect she'll be very surprised/shocked/disappointed. I can't help but feel a little guilt about walking out on them. I keep telling myself that this is a Megacorp that will survive just fine without me.

For now it looks like there's a good chance I'll be joining the Class of 2013.

More to follow.
__________________
NanoSour is offline   Reply With Quote
Old 04-30-2013, 08:47 AM   #15
Thinks s/he gets paid by the post
Live And Learn's Avatar
 
Join Date: Feb 2012
Location: Tampa Bay Area
Posts: 1,688
Quote:
Originally Posted by NanoSour View Post
Time for an update on our decision.

Although, a couple weeks behind schedule, we decided to put our house on the market. I still have yet to notify Megacorp which will be quite a surprise for them. We'll wait to get a solid offer on the house before I let them know.

Our plan is to make the move mid July if everything goes well. I'm surprised how difficult and emotional this decision is/was, and at times, DW and I are not sure we're doing the right thing. But, we figure it's a win no matter what happens which gives us some comfort.

I will say I'm very apprehensive about my upcoming discussion with my boss. I suspect she'll be very surprised/shocked/disappointed. I can't help but feel a little guilt about walking out on them. I keep telling myself that this is a Megacorp that will survive just fine without me.

For now it looks like there's a good chance I'll be joining the Class of 2013.

More to follow.
Congratulations on your decision I am very happy for you !!

What is that song "well, you can't please everyone, so you've got to please yourself". Don't worry about Megacorp and don't feel guilty about it. You've accomplished what so many American's cannot - saving for retirement ! Be proud. I know you'll do all you can to ensure the transition at Megacorp is as smooth as possible.

I know the emotional uproar and self doubt that comes with this. I'm decided to join the Class of 2013 also - but nothing is official yet and I can still change my mind, so it doesn't feel all that "real" yet. Putting your house on the market is a solid step and I know once I make that first real step that I'll freak out a bit and doubt the decision even more. BUT, I suspect that both you and I will look back on this in 1, 2, 5, 10 and 20 years and say "best decision I ever made !".

All the best
__________________
"For the time being no discipline brings joy, but seems grievous and painful; but afterwards it yields a peaceable fruit of righteousness to those who have been trained by it." ~
Hebrews 12:11

ER'd in June 2015 at age 52. Initial WR 3%. 50/40/10 (Equity/Bond/Short Term) AA.
Live And Learn is offline   Reply With Quote
Old 04-30-2013, 08:53 AM   #16
Thinks s/he gets paid by the post
heeyy_joe's Avatar
 
Join Date: Nov 2012
Location: Madeira Beach Fl
Posts: 1,403
Guilt upon walking out (retiring) should not be your cross to bear. Let it go! Enjoy your kids while they are still at home, get their opinion on a move so at least they feel as though they have been heard and considered.
__________________
_______________________________________________
"A man is a success if he gets up in the morning and goes to bed at night and in between does what he wants to do" --Bob Dylan.
heeyy_joe is offline   Reply With Quote
Old 04-30-2013, 09:28 AM   #17
Recycles dryer sheets
 
Join Date: Jul 2012
Posts: 229
As some of the other posters pointed it out, how do you meet your cash needs the next 9 years or so? You have living expenses half covered with the pension, which leaves a need of about $400K (inflation) to meet living expenses plus you have another $210K in college expense during that window. That $610K exhausts all your after tax savings all of your home equity and your Roth and you would still be short. Once you hit 59.5 you are home free but you have to get there first. Even with 72t early access, you do not generate enough cash flow. I guess student loans for the kids & you pay them off would be an option. Otherwise 5 more years takes care of that cash shortage, but you end up with more money in retirement than you actually need. (I am assuming based on your kids current age you will have 7 years of college expenses before you reach 59.5 & your kids are among the 40% that finish in 4 years)
__________________
Shanky is offline   Reply With Quote
Old 04-30-2013, 09:30 AM   #18
Thinks s/he gets paid by the post
 
Join Date: Jul 2002
Posts: 1,037
Agree with heeyy joe above regarding leaving. In my case, the clincher was when I realized that I'll have the freedom of raising my boys without the pressure of a career and meeting the organizations priorities. Priceless, they were only 1 and 3 years old at the time. I'm always available and connected, even though now they are 16 and 14.
Was fortunate also that I was approached for consulting agreement after retiring and it padded the stash a bit, but once the travel started ramping up, I quit that within two years.
Just curious what state your moving to that is good for retirees?
__________________
RE2Boys is offline   Reply With Quote
Old 05-04-2013, 08:42 PM   #19
Full time employment: Posting here.
 
Join Date: Jan 2008
Posts: 609
Today we are another step closer. A rather huge step as we accepted an offer to purchase our house. The house has been listed for 9 days and we got 3 offers, 2 at full asking price.

Now I have to have a big conversation with Megacorp. It may happen this week, but I may choose to wait until after the home inspection just in case the deal falls through.

Things are sure happening fast and it is quite stressful from my POV. But as they say, "nothing ventured, nothing gained".

Once I've had the conversation with employer, we'll get a mortgage pre-approval and start looking for our retirement home. It'll be interesting to see how the mortgage companies treats our situation, as I'll have no job, a decent pension, and some VG funds. Our cash flow plan is to set up a monthly deposit from VG to our checking account. Plan is to deposit 4 years of expenses into VG total Bond index fund and withdraw the monthly deposit from this fund. The rest of the assets will be spread across various VG index funds and eventually transfer 401K over to VG.

Well that's it for now. I'll let you know how the inspection goes.


Nano
__________________
NanoSour is offline   Reply With Quote
Old 05-04-2013, 09:34 PM   #20
Moderator
MBAustin's Avatar
 
Join Date: Jul 2010
Posts: 4,148
Congrats on the next step!

I was apprehensive about talking with my Megacorp as well. Although I did get a call from my VP asking me what it would take to get me to stay on, after that everyone seemed to understand I was leaving (I gave 6 weeks notice.).

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!
__________________

__________________
"One of the funny things about the stock market is that every time one person buys, another sells, and both think they are astute." William Feather
----------------------------------
ER'd Oct. 2010 at 53. Life is good.
MBAustin 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


 

 
All times are GMT -6. The time now is 04:37 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.