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I think I'm going to say it ..... One More Year :(
Old 02-24-2013, 02:06 PM   #1
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I think I'm going to say it ..... One More Year :(

I've been running calculators forever hoping to retire at 50 (August 2013). I actually had two scenarios going - one of which included a severance package of 100k which looked likely. Just found out there will be no severance - they "highly value my work" and will be keeping me on. It seems odd to be bummed out by this news, but that's how I feel.

So now I feel like I need to work OMY to make up for the "lost" severance ! How crazy is that ??



Stats:
  • Age 50, DH 55.
    • DH works part time earning 12k to age 62
  • 40 year planning horizon
  • 2.0mm in assets (50 / 42 / 8 AA; 1mm of that in 401k) after contingencies and not including home equity (180k). Zero debt.
    • 150k contingency for one time expenses (roof, car, dog illness, etc)
    • 100k contingency for "bucket list vacations"
    • 100k to self fund long term care (14 months - after that they can have the house)
    • 200k contingency for a 10% market drop
Success rates:
Capture.PNG
  • 2.0 is what I currently use.
  • 2.1 was with the severance that will not be.
  • 2.2 adds back the 10% market drop contingency but also adds in ad additional 2k / year for better vacations
Budget is 87K annually:
  • 28k HI (19k full Obamacare rate), Dr Visits, Meds, other Out of Pocket
  • 17k Home and Utilities (including 1.5% home value for maintenance)
  • 6k Taxes
  • 3k annual "accrual" for one time expenses
  • 33k everything else
Like so many here I am a worrywart, so as my sig lines says, I keep changing the numbers so that it looks like I can't make my goal of retiring at 50 ! The lack of severance is giving me a GREAT excuse to work one more year (actually, I've somehow convinced myself that it needs to be TWO more years !)

Am I nuts ?
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Old 02-24-2013, 02:49 PM   #2
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Retire the day before you turn 51! You look pretty well set and organized.

My goal is 55 (birthday next month) but I realized I am saving enough to pay off my last two rental property mortgages in the next year or two. Then I could build up a really nice cash cushion if I stay another year or two.

Had a wake up call this morning though with the sudden death of a friend who is four years older. I'm also very conflicted.
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Old 02-24-2013, 02:50 PM   #3
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Pensions or other non-SS retirement income?

You made no mention of SS and at your budget level, $87k, SS could cover a significant percentage of that, especially post-65 when you're on Medicare.
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Old 02-24-2013, 03:01 PM   #4
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Originally Posted by WestLake View Post
I could build up a really nice cash cushion if I stay another year or two. Dang this is a trap!
There's a lot of truth to that. When MegaCorp booted my worthless ass out the door and into the parking lot in 2006 at 58 yrs old, I was devastated. I signed up for unemployment, decided what to do with my one year of severance pay and started to look for work. Manufacturing jobs in 2006 were not easy to come by.

Learned about the concept of FIRE, did a LOT of calculating (and have never stopped!) and gradually starting feeling FIRE'd instead of fired. Once the stress of the first few months was over, it's all been good.

Like OP, who said she was disappointed to not be fired with severance, I've concluded that getting the boot is OK if it turns out you don't have to work for pay and that otherwise you would have been sucked into the "one more year" trap. That is, you get a little help with the decision and with severance and unemployment insurance to buffer the pain.

Time is precious and a year or two or three spent where you're not maximizing life's enjoyment (however you define that) is time you'll never get back. Is having a 100% chance of portfolio survival vs a 99% chance or having a $80k budget instead of a $75k budget really worth it? Do you think that other variables post retirement won't trump small differences at the beginning?

The sand is running through the hour glass.........
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Old 02-24-2013, 04:06 PM   #5
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Easy to get caught in the one more year trap. But if 1 or 2 more year puts you over the top, I would. Fifty was my goal, but settled for 52.
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Old 02-24-2013, 04:28 PM   #6
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If it were me I would lower my income / expenses, get subsidized health care and quit tomorrow. But you have to do what is important to you. I would rather live on less and not have to work at a regular job.

As youbet asked no pensions or SS? That would have to help your success rate.
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Old 02-24-2013, 04:29 PM   #7
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Quote:
Originally Posted by youbet View Post
Pensions or other non-SS retirement income?

You made no mention of SS and at your budget level, $87k, SS could cover a significant percentage of that, especially post-65 when you're on Medicare.
Same question. We have less than 2 mill, a higher annual expenditure at $94k but have figured in 50% of our expected SS and have a 95% success rate. So I too am wondering why your numbers are so different from ours when you have a higher starting portfolio.
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Old 02-24-2013, 06:07 PM   #8
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Add me to the question about SS. (Me three)
My nest egg is smaller, but in the same ballpark... age is close... budget is close... and fire calc gives me 100%.... with SS included.
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Old 02-24-2013, 06:36 PM   #9
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oops ! Yes, I have included 65% of projected social security in the calculators assuming a stop work age of 62 for DH and 50 for me. I assumed DH would collect at 62 and I would wait to 70. Annual amounts are 10k for him and 21k for me.

If I could keep MAGI below 60k it makes a huge difference on HI costs but, as usual, I'm afraid to count on good news !

Really appreciate the comments and questions.

I had my heart SO set on ER.
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Old 02-24-2013, 06:39 PM   #10
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Quote:
Originally Posted by Lisa99 View Post

Same question. We have less than 2 mill, a higher annual expenditure at $94k but have figured in 50% of our expected SS and have a 95% success rate. So I too am wondering why your numbers are so different from ours when you have a higher starting portfolio.
I am using portfolio costs at .35% which is what I am paying today (portfolio is almost all ETFs). Could that be the difference ?
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Hebrews 12:11

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Old 02-24-2013, 07:20 PM   #11
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Originally Posted by youbet View Post
There's a lot of truth to that. When MegaCorp booted my worthless ass out the door and into the parking lot in 2006 at 58 yrs old, I was devastated. I signed up for unemployment, decided what to do with my one year of severance pay and started to look for work. Manufacturing jobs in 2006 were not easy to come by.

Learned about the concept of FIRE, did a LOT of calculating (and have never stopped!) and gradually starting feeling FIRE'd instead of fired. Once the stress of the first few months was over, it's all been good.

Like OP, who said she was disappointed to not be fired with severance, I've concluded that getting the boot is OK if it turns out you don't have to work for pay and that otherwise you would have been sucked into the "one more year" trap. That is, you get a little help with the decision and with severance and unemployment insurance to buffer the pain.

Time is precious and a year or two or three spent where you're not maximizing life's enjoyment (however you define that) is time you'll never get back. Is having a 100% chance of portfolio survival vs a 99% chance or having a $80k budget instead of a $75k budget really worth it? Do you think that other variables post retirement won't trump small differences at the beginning?

The sand is running through the hour glass.........
Great story.
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Old 02-24-2013, 08:24 PM   #12
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Originally Posted by Live And Learn View Post
oops ! Yes, I have included 65% of projected social security in the calculators assuming a stop work age of 62 for DH and 50 for me. I assumed DH would collect at 62 and I would wait to 70. Annual amounts are 10k for him and 21k for me.

If I could keep MAGI below 60k it makes a huge difference on HI costs but, as usual, I'm afraid to count on good news !

Really appreciate the comments and questions.

I had my heart SO set on ER.
Try rerunning Firecalc with you both collecting SS at 62 and see what you get. For us, starting SS at 62 meant several more thousand per year in spending ability since we were preserving more of our investment dollars.
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Old 02-24-2013, 08:51 PM   #13
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We keep trying to cut our annual expenses in part just to not draw down the retirement accounts, but an added incentive now is to keep MAGI as low as possible to get the health care subsidies.

Downsizing and a lower cost of living area are high on the agenda for us over the next year or so. I would rather have my days free doing low cost things like hiking, biking or walking on the beach and just cut expenses / MAGI needed to cover those expenses than have an 8 - 5 job, if I can help it.
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Old 02-24-2013, 09:10 PM   #14
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If you were really looking forward to spending your life doing things you want to be doing rather being a corporate drone and the numbers work then FIRE. You could easily end up working another year or two, and if the market declines, end up having a lower net worth. Then what? Work another year or two? I've had the same experience of losing friends/family at a young age and it sure motivated me to enjoy life now.
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Old 02-24-2013, 09:21 PM   #15
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If you were really looking forward to spending your life doing things you want to be doing rather being a corporate drone and the numbers work then FIRE. You could easily end up working another year or two, and if the market declines, end up having a lower net worth. Then what? Work another year or two? I've had the same experience of losing friends/family at a young age and it sure motivated me to enjoy life now.
What a great way to look at things.
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Old 02-24-2013, 09:26 PM   #16
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You could consider the solution to the 'one more year' trap that my DW came up with. Her solution is to take more time off from work (whenever she is tired), even if it is unpaid leave, and then keep on the payroll to keep building up contributions to her 457. Also, by keeping on the payroll, she is more comfortable with taking two travel vacations a year. Also, she finally decided to coast, as 50% of her coworkers have been coasting their entire lives.
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Old 02-24-2013, 09:30 PM   #17
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You could consider the solution to the 'one more year' trap that my DW came up with. Her solution is to take more time off from work (whenever she is tired), even if it is unpaid leave, and then keep on the payroll to keep building up contributions to her 457.
I doubt many employers would be willing to allow someone to just take unpaid leave whenever they start feeling burned out, and then come back when they are ready. She must have a highly specialized skill that isn't easy to replace or else she walks on water there to the point where an employer would accept those terms.

If I could get that deal I'd be taking unpaid leave about half the time...
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Old 02-24-2013, 09:44 PM   #18
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I doubt many employers would be willing to allow someone to just take unpaid leave whenever they start feeling burned out, and then come back when they are ready. She must have a highly specialized skill that isn't easy to replace or else she walks on water there to the point where an employer would accept those terms.

If I could get that deal I'd be taking unpaid leave about half the time...
I couldn't get away with that in my job either. And she can't do the unpaid leave until she exhausts her paid vacation leave. But after that, so far it has worked out for her. It helps that her management is incompetent. and she does have a specialized skill and walks on water. Which is why it pertains to Live and Learn, who is too valuable to get severance pay.
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Old 02-25-2013, 03:15 AM   #19
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It seems to me that your contingency funds are overly robust. Why are you setting aside 150k contingency for "one time expenses" and then another 3k/year for the same thing? Do you really need to grow it so much? Same with the 100k for "bucket list vacations." HOw much do you think you will spend per year on those? Could you do one "bucket list" vacation a year and then alternate with less extravagent but still enjoyable travel the next? Or make vacation plans contingent on how that part of your nest egg performed the year before (high returns = major bucket list vacation, worse returns or a loss = staycations, camping, visiting friends and family, etc.).

YOur contingency setasides are over 25% of what you are putting in the different calculators. If you put that into your calculations, I bet you'd come back at 100% across the board. You seem to have a lot of wiggle room in your budget, as well. Your health related costs seem very high to me. How much of the home related costs are utilities and how much are maintenance? Isn't the latter also somewhat covered by your contingency? 33k for everything else might be a bit high, too, depending on where you live -- if you brought that down taxes would be lower, too.

I think you are FI. If I were in your position, with your assets and expenses, I would retire.

lhamo
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Old 02-25-2013, 06:37 AM   #20
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If you worry now, how do you think you'll feel after you retire espically if you don't work those one or two more years? Only you can decide the trade-offs between work, desired ER lifestyle, FI, OMY (or two), etc. "When" you are really happy with that balance, then it's probably time to go.
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