I have been here awhile and have read a lot of the post on this site; I posted in the “Hi, I am” our numbers and plan to move overseas when the DW is retired in 13 months. I see a lot of people on the board start with a budget and then plan to save based on that budget and what they feel is s a SWR over a period of time of life expectancy adding in “One time” expenses as needed.
I want to get any comments on how I did our plan and if I am missing something:
1. Started with a budget based on COL information I found on line for Ireland in 2014 and expected expenses (~$91K). This seems to be about 10% higher than our current area based on many different inputs, but is ~2X the top 20% National Average Net Income posted on line for Ireland. I also did one spreadsheet for staying in our current location, but downsizing McMansion and renting and based on our current COL.
The budgets include $1000 each month for miscellaneous items.
Medical, dental and vision for both is covered by DW who can carry hers’ over @ the same cost into retirement and is already taken out of pension; we also both have TriCare and VA available too.
Travel in the budget has been doubled to allow for more travel when DW is retired based on costs from current location to Europe and will provide even more once we are in Ireland since it will be cheaper to get to places we want to see.
Items in the current budget that go away have been removed from planning such as commute costs, work clothes, and tolls.
2. I add 2.5% inflation to all items in the budget each year starting in 2014 and plot out this COL in a spreadsheet for each year up to 25 years broken out for monthly spending. Annual COL/12 months.
3. I then put our post tax and life insurance deduction income (known and projected) in columns in the spreadsheet and total them up each month. Tax withholding is based on “Single Rate”, 0 exemptions, we normally get a refund. We also plan to setup residences in a state with no income tax before moving to Ireland.
4. I add in an annual 2% COLA adjustment for income streams that have COLA
5. I then subtract the monthly income from the monthly budget to get any short fall and then deduct that from our moneys starting with cash on hand in savings account and then start on my tax deferred saving accounts when I reach 59.5.
6. As more income streams come on-line we have a smaller shortfall until income exceeds projected spending at which time we start to save again.
7. I planned on an annual 5.5% return on investments and we are invested 84/14/2 equity/fixed income/cash. I have tested by putting in 0% ROI and still come out OK in FireCalc and all of the other calculators out there. I also, went to Schwab and had them run the numbers and they came up with a good to go in the standard model and MC models.
8. We have a WR of that starts at 2.8% that peaks at 4.27% in year 4 and goes down to 0% by year 7 of 25 year plan.
9. We both take SS @ 62 since most family members are already dead and most did not live longer than 80 years, pretty close the break-even point of SS, if we live longer than the break-even point we miss out on some money, but we discussed it and are willing to take that chance.
10. One thing not planned yet is ROTH conversion; this will need planning since our income will put us in the 25% bracket in year 5 of the plan before DW takes SS and her last income stream comes on line @ 65.
11. I built in calculations for RMD @ 70.5 for both of us into spreadsheet, but that is even more money that would probably be added to savings account.
12. I also did not plan on any large “One-time” expense since we would be renting and most of the “One-time” expenses come up with owning a home. Car payments are built into budget every year and vehicles we have are less than 1 year old and covered by warranty and maintenance plans. We have no kids and all debt will be paid off by the time DW retires.
13. Term life insurance is in place to cover pension lost if a person dies before all income streams come on line, than they will be cancelled @ a future date when no longer needed.
I know this is long, but the devil is in the details and I want to get the great advice I believe this group will provide.
I want to get any comments on how I did our plan and if I am missing something:
1. Started with a budget based on COL information I found on line for Ireland in 2014 and expected expenses (~$91K). This seems to be about 10% higher than our current area based on many different inputs, but is ~2X the top 20% National Average Net Income posted on line for Ireland. I also did one spreadsheet for staying in our current location, but downsizing McMansion and renting and based on our current COL.
The budgets include $1000 each month for miscellaneous items.
Medical, dental and vision for both is covered by DW who can carry hers’ over @ the same cost into retirement and is already taken out of pension; we also both have TriCare and VA available too.
Travel in the budget has been doubled to allow for more travel when DW is retired based on costs from current location to Europe and will provide even more once we are in Ireland since it will be cheaper to get to places we want to see.
Items in the current budget that go away have been removed from planning such as commute costs, work clothes, and tolls.
2. I add 2.5% inflation to all items in the budget each year starting in 2014 and plot out this COL in a spreadsheet for each year up to 25 years broken out for monthly spending. Annual COL/12 months.
3. I then put our post tax and life insurance deduction income (known and projected) in columns in the spreadsheet and total them up each month. Tax withholding is based on “Single Rate”, 0 exemptions, we normally get a refund. We also plan to setup residences in a state with no income tax before moving to Ireland.
4. I add in an annual 2% COLA adjustment for income streams that have COLA
5. I then subtract the monthly income from the monthly budget to get any short fall and then deduct that from our moneys starting with cash on hand in savings account and then start on my tax deferred saving accounts when I reach 59.5.
6. As more income streams come on-line we have a smaller shortfall until income exceeds projected spending at which time we start to save again.
7. I planned on an annual 5.5% return on investments and we are invested 84/14/2 equity/fixed income/cash. I have tested by putting in 0% ROI and still come out OK in FireCalc and all of the other calculators out there. I also, went to Schwab and had them run the numbers and they came up with a good to go in the standard model and MC models.
8. We have a WR of that starts at 2.8% that peaks at 4.27% in year 4 and goes down to 0% by year 7 of 25 year plan.
9. We both take SS @ 62 since most family members are already dead and most did not live longer than 80 years, pretty close the break-even point of SS, if we live longer than the break-even point we miss out on some money, but we discussed it and are willing to take that chance.
10. One thing not planned yet is ROTH conversion; this will need planning since our income will put us in the 25% bracket in year 5 of the plan before DW takes SS and her last income stream comes on line @ 65.
11. I built in calculations for RMD @ 70.5 for both of us into spreadsheet, but that is even more money that would probably be added to savings account.
12. I also did not plan on any large “One-time” expense since we would be renting and most of the “One-time” expenses come up with owning a home. Car payments are built into budget every year and vehicles we have are less than 1 year old and covered by warranty and maintenance plans. We have no kids and all debt will be paid off by the time DW retires.
13. Term life insurance is in place to cover pension lost if a person dies before all income streams come on line, than they will be cancelled @ a future date when no longer needed.
I know this is long, but the devil is in the details and I want to get the great advice I believe this group will provide.
