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Old 09-14-2013, 01:50 PM   #21
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Well, I will be 40 next year. That doesn't feel young to me. We decided not to have kids till now, and biology being what it is -- I only have 0 to 5 years to change my mind. I don't think it's gonna happen.
Hey, you never know!

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Old 09-14-2013, 01:52 PM   #22
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Originally Posted by slowsaver View Post
I did not include savings or income-tax in my total. I categorize my expenses (and income) in a checkbook balancing program called Moneydance. The categories I included in the estimate include: Automotive (gas, insurance, repairs), grocery, Internet & phone, utilities, condo expenses (my mom lives there), property tax, eating out, entertainment and personal items, travel, misc cash withdrawals (not categorized).
FIRECALC assumes the spending you enter includes taxes. Therefore you need to add State and Federal Income tax into your expenses when you are retired. (you'll stop paying FICA and Medicare when you don't work)
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Old 09-14-2013, 01:55 PM   #23
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Thanks for all the great comments! Don't worry, I won't quit saving. Both my husband and I are natural savers anyway.



I did not include savings or income-tax in my total. I categorize my expenses (and income) in a checkbook balancing program called Moneydance. The categories I included in the estimate include: Automotive (gas, insurance, repairs), grocery, Internet & phone, utilities, condo expenses (my mom lives there), property tax, eating out, entertainment and personal items, travel, misc cash withdrawals (not categorized).
Income tax is an expense to FIRECalc, so be sure to include them in the expenses input. FIRECalc doesn't know anything about taxes. Health insurance costs will be pretty clear once ACA exchanges open, unless you have some form of employer subsidy. Be sure to include HI deductibles in your planning if they end up being significantly different than your current expenses. And, as mentioned before, be sure to budget for those "unplanned" expenses like house maintenance and new cars.

Your situation is similar to a few others here. You can stop saving, but not necessarily stop working. This lets your portfolio grow without withdrawals for a few years. If you look at your yearly retirement savings versus your average yearly portfolio gain you may see that your savings are actually a small part of your portfolio's growth. Or, you can keep up the savings and be FI that much earlier.
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Old 09-14-2013, 02:01 PM   #24
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Congratulations, you're in great financial shape.

If you're really planning to work another 11 years, you'll have plenty of time to watch your "lumpy" expenses go up and down and get a good feeling for them. I expect Obamacare will be clearer 11 years from now, too.

I'd start thinking about things I'd like to do in retirement. You might decide that you want to allow for some expensive hobbies or entertainment. Buy a motorhome and do one lap of America? Take a round-the-world cruise?

Your mother might be keeping you somewhat tied down mentally right now, so it's hard to think about those things.
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Old 09-14-2013, 02:07 PM   #25
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Here is a bit of useful reading for you! I know it helped me a lot...

Budget models of retirement spending - Bogleheads
This is excellent! I will keep this bookmarked for my friends.
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Old 09-14-2013, 05:08 PM   #26
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I think you are in great place. You are living pretty frugal. You have a great plan. We basically did what you are planning. We were both 50 when I retired in 2006. DW was already there. We live in central CA. Our budget matches your expenses if you add 15k more for a really excellent Health Care Plan that I was allowed to continue after leaving employment. I wonder about shopping the markets for something cheaper, you will obviously be able to do that. Paid for house helps. Cars last much longer in ER, at least they do for us! We are now just 4 years from that nice little raise in pay that comes at 62. Where has the time gone?

You guys are so way on the right track...
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Old 09-14-2013, 06:58 PM   #27
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I think you are in great place. You are living pretty frugal. You have a great plan. We basically did what you are planning. We were both 50 when I retired in 2006. DW was already there. We live in central CA. Our budget matches your expenses if you add 15k more for a really excellent Health Care Plan that I was allowed to continue after leaving employment....
Thanks for the encouragement ... but 15k for health insurance? Gee, that's a 40% increase over my expenses. There must be millions of people who could afford to retire if it weren't for the health insurance the get thru their employer.
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Old 09-16-2013, 03:18 PM   #28
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No ! I'm pretty sure Nostradamus said something about it though.
At the moment, healthcare expenses are increasing on average 5.5%/yr. But you get a two-fold increase, you get the increase due to normal inflation (5.5%) and you get a increase due to you and your family being older.

I'm in California and CoveredCA.com (the State exchange site), actually makes it really easy to guesstimate how large those increases due to aging will be.

i.e A couple with no kids in their mid-40s can be paying around $650/month. Another couple with no kids in their mid-50s can be paying around $1020/month, for the same plan today, by 64 that climbs to $1366/month.

Or, from mid-40 to 65, you see roughly a 4.5% annual compounding due to age steps. You'll have the regularly inflation increases on top of that. So right around 10%/year.

You also have the above or below 400% FPL on MAGI to consider. Stay below, and the subsidizes, today, will keep your health care coverage to around 10% of your income or less.
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Old 09-16-2013, 03:34 PM   #29
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Firecalc requires GROSS spending- so you need to take your expenses (net) and add back in taxes.

I approached my retirement budget in 2 directions.
- First (more painful) pass was to go through quicken data from the past decade and figure out my expenses.

- Second method was easier - took our gross income and subtracted out the things we won't be spending on in retirement. (we'll have the mortgage paid off, we won't be paying fica and medicare taxes). Then added in the things that aren't part of our current budget (higher health insurance, more travel).

The second budget gave me a higher number - so it's a more conservative number to plug into firecalc.

Third method - just to be super duper safe - used quicken lifetime planner to model spending changes through the years. Since we have some stuff already set up in quicken (savings goals for the kids 529's, etc.) that was taken care of.

As far as home maintenance - we own a 49 year old home in CA - and have been doing some of the big ticket items while still employed (new windows, finally updated the 1960's original kitchen, in the midst of bathroom remodels.). Hopefully we'll get the really big ticket stuff done while we have bigger income streams - but we still budget savings for new roof, solar panels (when we eventually get an EV car, but after we get new roof.) etc. We are not scrimping on the home improvement because we feel that quality will pay for itself over time. (eg - no particle board in our kitchen anywhere.)
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