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Expense analysis
Old 03-07-2013, 08:01 PM   #1
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Expense analysis

I'm trying to figure out if I can possibly be at a 3% WR


Current ER budget : 88k
  • Includes 29k for Healthcare of which 21k is Premiums (based on full Obamacare for 2)
  • 12k comes from DH work (which currently provides HI - Total cost in 2012 about 6k including premiums + copay for 1 hip replacement)
  • 76k needs to come from savings (currently 2.0mm of which 1mm is pretax and 1mm is aftertax)
October possibilities:
  • Scenario 1: DH's job continues to offer HI; assume same 12k spend in 2013; 17k less than ER budget. ER budget now 88k - 17 = 71k less 12k from DH = 59k from savings = 3% WR
  • Scenario 2: Buy HI through Exchange. ER budget = 88k - 12k from work = 76k. Use 16k in cash/after tax funds; remainder from taxable funds .... MAGI = 60k. Obamacare subsidy = 15k. Expenses now 88k - 15k (subsidy) = 73k - 12 (DH) = 61 from Savings (3% WR). Only need to use 2k aftertax dollars to get to MAGI <60k for subsidy.
Does this look right ? If it does I am comfortable retiring this year (as soon as we know the "truth" of the cost of the exchanges).
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Original ER date set at Aug, 2013 (age 50). Succumbed to OTMY syndrome. New target of March 2015 (age 52).
No sense retiring if you can't sleep at night worrying if you have enough "cushion" in your numbers.
44 Mondays to go - assuming I don't chicken out again !
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Old 03-07-2013, 08:18 PM   #2
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You need to add another 20% for a 'contingency contingency' and delay at least OMY - probably two or three.
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Old 03-07-2013, 08:25 PM   #3
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Quote:
Originally Posted by REWahoo View Post
You need to add another 20% for a 'contingency contingency' and delay at least OMY - probably two or three.
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Original ER date set at Aug, 2013 (age 50). Succumbed to OTMY syndrome. New target of March 2015 (age 52).
No sense retiring if you can't sleep at night worrying if you have enough "cushion" in your numbers.
44 Mondays to go - assuming I don't chicken out again !
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Old 03-08-2013, 09:07 AM   #4
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Ok seriously - is my logic / math correct ? would I really be at 3% WR ?
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Original ER date set at Aug, 2013 (age 50). Succumbed to OTMY syndrome. New target of March 2015 (age 52).
No sense retiring if you can't sleep at night worrying if you have enough "cushion" in your numbers.
44 Mondays to go - assuming I don't chicken out again !
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Old 03-08-2013, 09:13 AM   #5
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Both your scenarios ($59K and $61K) work out to ~3% of $2M. I cannot speak to the HI subsidy issue as I'm not up to speed on the subject.

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Old 03-08-2013, 09:14 AM   #6
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the biggest problem i find is having the guts to just do it-fear is the greatest factor. i could have retired at least 2 years earlier-but i was nervous about it. just do it.
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Old 03-08-2013, 09:14 AM   #7
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Just to throw a wrench in the calculations: if you have 2M, producing income of over 60k, in addition to your DH's work income, why would there be a subsidy of 15k from Obamacare?

Just curious...

R
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Old 03-08-2013, 09:34 AM   #8
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I personally never use any flat rate withdrawal. Just the Fidelity Planner and my own spreadsheet so I can see how the numbers look year by year. There are too many variables for us with RMDs, taxes, part time work, pensions (COLA and nonCOLA) and two Social Security payments (and all the various options) to make a flat rate percent withdrawal rate meaningful.

The health care subsidies are obviously very helpful to ER to make the numbers work. We are spending a lot of time this year figuring out how to keep our 2014 MAGI under the maximum subsidy amount.
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Old 03-08-2013, 09:39 AM   #9
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Originally Posted by daylatedollarshort View Post
I personally never use any flat rate withdrawal. Just the Fidelity Planner and my own spreadsheet so I can see how the numbers look year by year. There are too many variables for us with RMDs, taxes, part time work, pensions (COLA and nonCOLA) and two Social Security payments (and all the various options) to make a flat rate percent withdrawal rate meaningful.

The health care subsidies are obviously very helpful to ER to make the numbers work. We are spending a lot of time this year figuring out how to keep our 2014 MAGI under the maximum subsidy amount.
except of course if your past 70 and have minimum withdarwals
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Old 03-08-2013, 12:33 PM   #10
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Quote:
Originally Posted by Rambler View Post
Just to throw a wrench in the calculations: if you have 2M, producing income of over 60k, in addition to your DH's work income, why would there be a subsidy of 15k from Obamacare?

Just curious...

R
Income =
12k DH work
25k Dividends
37k Subtotal Taxable income
22k Realized Cap gains (should I choose to not use cash)
59k MAGI

Gets me to Obamacare subsidy level plus 0% tax on Cap Gains. All other spending comes from my cash reserve.
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Original ER date set at Aug, 2013 (age 50). Succumbed to OTMY syndrome. New target of March 2015 (age 52).
No sense retiring if you can't sleep at night worrying if you have enough "cushion" in your numbers.
44 Mondays to go - assuming I don't chicken out again !
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Old 03-09-2013, 11:04 AM   #11
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The good news - I'll probably be at a 3% WR and will retire this year.

The bad news - this realization has caused my BS bucket to overflow and the contingency BS bucket to become very heavy !

The past 2 days at w*rk were very trying and I was very vocal about my displeasure. I don't really know if its the j*b or the fact that I can probably say "see ya!" ! (If I knew the HI situation for 2014 I'd probably be typing my resignation letter right now).
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Original ER date set at Aug, 2013 (age 50). Succumbed to OTMY syndrome. New target of March 2015 (age 52).
No sense retiring if you can't sleep at night worrying if you have enough "cushion" in your numbers.
44 Mondays to go - assuming I don't chicken out again !
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