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Do I Have Enough To Retire From Firefighting
Old 06-01-2015, 08:06 AM   #1
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Do I Have Enough To Retire From Firefighting

Good Morning: I am 53 yrs old,and I have worked as a firefighter in a large city for 30 yrs.I will receive $4,250 per month with a 3% cola for life.I have $700,000 in my 457 account ( 50% total stock market vanguard index fund,and 50% in bond funds and stable value funds).My only debt is $140,000 mortgage at 4.5 % on a $210,000 house.Children are out of college and on their own with good jobs. Wife does not work.I want to retire now and continue to live in the Midwest 9 months,and Fla. for the winter.I could work 3 more years, but it is a young person's job,and I want to retire now.I have the opportunity to work part-time in a career that is whitecollar,and not physical.I would like to be done with firefighting in sub zero winters. I would appreciate any advice.Thanks,JPG.
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Old 06-01-2015, 08:12 AM   #2
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You might or you might not, depends on how much you intend to spend each year and what if any large lump sum purchases you make.

I would suggest you familiarize yourself with FIRECALC and run some scenarios to see what your chance of success and failure is. You will probably want to include SS estimates for you and wife when you use it.
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Old 06-01-2015, 08:13 AM   #3
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What does your spending/budget look like now and projected for retirement? How secure are the City's finances?

If the City is sound, that COLA'd pension would be sufficient for many people (particularly if you are eligible for Social Security in the future), not to mention the 700K portfolio. OTOH, in the unlikely event that you presently spend 100K a year and intend to continue doing so....
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Old 06-01-2015, 08:37 AM   #4
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You might or you might not, depends on how much you intend to spend each year and what if any large lump sum purchases you make.

I would suggest you familiarize yourself with FIRECALC and run some scenarios to see what your chance of success and failure is. You will probably want to include SS estimates for you and wife when you use it.
+1. In addition to projected spending (not a guess), you might as well tell us what age to plan to, most here will assume age 95 otherwise. Or better yet, start with FIRECalc: A different kind of retirement calculator.

This is definitely a life milestone where you want to learn how to fish vs asking to be given a fish...
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Old 06-01-2015, 08:51 AM   #5
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We currently spend 45k per year. Pension is safe because all city Fire & Police are in the same state pension. I plan a 3.5 % withdrawal rate from 457 to give me extra 2k per month . My only concern is going from zero per month for Healthcare to 900 per month. Hopefully make it to age 90. Thanks, JPG.
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Old 06-01-2015, 08:53 AM   #6
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FIRECalc: A different kind of retirement calculator
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Old 06-01-2015, 09:35 AM   #7
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On the surface it sounds like you would be fine, your COLA'd pension will be $51,000 a year and you are planning to spend $45K a year (is your mortgage payment included in that figure?) Your health insurance cost is $10,800 a year, that is about 1.5% of your balance in your 457. You can start SS in 9 years, you should get estimates of what it will provide for both you and your wife. We also don't know how much part-time income you will have or how much your winters in Florida will cost. When you get these numbers plug them into FIRECALC and see what your success rate looks like.
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Old 06-01-2015, 11:51 AM   #8
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Firecalc success rate looks good.ss for wife will be $ 1,121 a month at full retirement age.My ss from other jobs will be reduced because I have a public pension . My part time income will fluctuate and is hard to estimate. Fla rent will probably be 2k per month for 3 months . Thanks.
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Old 06-01-2015, 12:41 PM   #9
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We currently spend 45k per year. Pension is safe because all city Fire & Police are in the same state pension. I plan a 3.5 % withdrawal rate from 457 to give me extra 2k per month . My only concern is going from zero per month for Healthcare to 900 per month. Hopefully make it to age 90. Thanks, JPG.
I also suggest FireCalc (and other calculators) as others have.

One question on the above though: you say that your COLA'ed pension is $51K/yr and you list your spending as $45K/yr. If that is the case, why would you take $2K/mo from the 457? That makes me think that there is planned spending not included in the $45K.

IMHO, it is critical to understand what probable spending will be and how flexible that spending is. Be brutally honest or extra spending will creep in. Also, when using FireCalc and others, don't forget to adjust spending for taxation.

Good luck and ask any questions you have.
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Old 06-01-2015, 12:57 PM   #10
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Thanks Willers.The extra 2k per month would be for some travel and some flexible money for any unplanned expenses. 3.5% is under the conservative 4% rule, so I could enjoy that $ without depleting my best egg. We could cover most expenses with my pension, and use 3.5 % withdrawal for fun.I appreciate your ideas on this .
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Old 06-01-2015, 01:09 PM   #11
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Thanks Willers.The extra 2k per month would be for some travel and some flexible money for any unplanned expenses. 3.5% is under the conservative 4% rule, so I could enjoy that $ without depleting my best egg. We could cover most expenses with my pension, and use 3.5 % withdrawal for fun.I appreciate your ideas on this .
The "conservative 4% rule" is based on a 65 yo old retiree living 30 years with a 95% success rate, and there are many academics and investment gurus who question if it's conservative for the future. In any event, no studies I've seen conclude that the 4% SWR was ever conservative for a 53 yo...
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Old 06-01-2015, 01:09 PM   #12
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We currently spend 45k per year. Pension is safe because all city Fire & Police are in the same state pension. I plan a 3.5 % withdrawal rate from 457 to give me extra 2k per month . My only concern is going from zero per month for Healthcare to 900 per month. Hopefully make it to age 90. Thanks, JPG.
Wow--I must be spending too much or maybe a bit higher cost of living in the Northwest SEA area.

Single without a mortgage my "spend" would be in the $55K range. That would be if I paid off my mortgage in time for ER (54 age now).

I have two single ish friends that are in the same range after ER for two yrs now ($52K-$55K annual).

Great job on keeping the spending down!!
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Old 06-01-2015, 04:15 PM   #13
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Good point Midpack. I will lower my withdrawal to 2.5 %, I can get that rate in my stable value fund. Should I make withdrawals from stable value and let total stock index ride for 15 years ? Supernova, I live in Ohio where cost of living is reasonable.I am definitely retiring. We had 2 firefighters killed in an arson fire last year, and my wife wants me to retire and enjoy life . Thanks for all of the help .
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Old 06-01-2015, 04:26 PM   #14
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I am definitely retiring. We had 2 firefighters killed in an arson fire last year, and my wife wants me to retire and enjoy life . Thanks for all of the help .
I can relate - I'm retired law enforcement and went to eight line-of-duty funerals.

On the surface it looks like you're good to go but here are some issues to consider:

Some Important Questions to Answer Before Asking - Can I Retire?
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Old 06-01-2015, 04:27 PM   #15
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Is the $4250 per month pension before or after taxes? Any survivors benefits, life insurance or any other deductions? Or is that the net, spendable cash in your hand after you get paid each month? I'm a retired fed, and i have deductions for fed tax, health insurance, life insurance, dental insurance and survivors bennies all deducted before my check hits the bank on the first of the month.

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Old 06-01-2015, 04:58 PM   #16
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I'm in a similar position. My wife and I both have pensions that more than cover our expenses. We also have a fairly significant investment portfolio. We could live off of our pensions and not touch our retirement accounts, but I don't see the point. We saved this much and postponed gratification for decades when everyone else around us was spending everything they had. We did it so that we could splurge in retirement.

Now we are retired and its time to splurge. We are moving to a much nicer, higher cost of living area and splurging on housing, cars and travel. We are withdrawing about 4% from our portfolio but the key is that since a large percentage of our new budget is discretionary spending (25% is travel), we can easily cut back if the market isn't kind to us. So if I were you, I would not be afraid to spend 4% as long as you can easily cut back (or not give yourself inflation raises for a few years) if the market has a couple bad years.
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Old 06-01-2015, 05:10 PM   #17
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Before taxes. Healthcare and taxes will be taken out. If we are only looking at $, then I should keep working, but I want to retire. I thought I was fortunate to have a pension with cola, but it looks like that might not be enough . If I have to , I will go out and get a safer job. How do all of these people retire early without a pension ? If a pension with cola and 700 k isn't enough , then I guess you have to be a multi millionaire to retire .
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Old 06-01-2015, 05:27 PM   #18
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Retire now, collect your pension and do something else since you have the opportunity. I think you will find out that life is pretty good!
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Old 06-01-2015, 06:19 PM   #19
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Thanks Willers.The extra 2k per month would be for some travel and some flexible money for any unplanned expenses. 3.5% is under the conservative 4% rule, so I could enjoy that $ without depleting my best egg. We could cover most expenses with my pension, and use 3.5 % withdrawal for fun.I appreciate your ideas on this .
Do you have a detailed budget including how much you need to set aside yearly for things such as car replacement or house upkeep? You have 24K a year for travel and "unplanned expenses", if you can fine tune that a little you will have a more realistic number to work with. Are you okay with traveling less if it means you can retire? You and your spouse should tweak the numbers and talk over your "must" haves in retirement.
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Old 06-01-2015, 06:54 PM   #20
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I think you are in a pretty good spot but if you spending $45k for two people and a modest mortgage there are some spots you can definitely trim the budget. Once SS kicks in I think you will be fine. I think you also mentioned a PT job. It's a great idea. Take 6-12 months off and do anything you want, then re-evaluate. If you own two cars and you both aren't working you can sell one and save on depreciation, registration, wear and tear. I think you are very close but need some adjustments to get over the hump.
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