Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Looking over the cliff
Old 12-10-2019, 07:22 PM   #1
Dryer sheet wannabe
 
Join Date: Dec 2019
Location: Half way between the Grand Canyon and Yellowstone
Posts: 19
Looking over the cliff

As a longtime lurker on this site, I have been impressed by the quality of advice regarding retirement finances that the members offer to one another. So while my decision to retire is a done deal (irrevocable and happening at the end of the month,) and I think I have things pretty well lined out, I might sleep better at night if there is some agreement that I have not missed anything important. So here goes…


DW and I have both just turned 60, emptynesters whose kids appear to have launched, are in good health, and can realistically expect to live into our 90’s, based on family histories.


Investment Assets
After tax accounts $950k
Trad. IRA or equivalents $1.54M
Roth IRA $125K
Total $2.615M


Liabilities
Mortgage $140k

Post-Retirement Income
Int. & Div. $55k
Pension annuity $37k
Early Retirement $21k (plus 90% of health insurance coverage, both until age 65)
Total $113K

Post Retirement Expenses
Budget $75k
LT care ins $8k
Taxes $22k
Total $105k

I have a significant portion of the investment assets in corporate bonds, preferred stocks, and high yielding stocks. The pension annuity comes from my retirement as being a state employee for more than a decade prior to 2000. The state allows retirees to take their annuitize their account balance and does so at an above-market rate, so doing so was a no brainer. The annuity is full survivorship and a 2% COLA.


It appears that there will be three periods to our retirement. From ages 60-65 the early retirement incentive from my current employer will provide sufficient income and health insurance coverage to about match our expenses, and give us some money for extravagances. From 65-70 we will have to draw down principal, but less 20% of our current assets. We plan on taking SS at 70 and expect to receive somewhere around $55k/yr, which will put us substantially back into a cashflow positive situation.


My wife wants to join me in retirement, leaving a job which she does not find to be fulfilling but is quite lucrative and allows her to work as few or as many hours as she wants. I keep suggesting that she could work OM.5Y just to give us a chance to get used to not having my paycheck.


So what am I missing? Why am I so unsettled about shifting from being an asset accumulator to an asset utilizer?


Thanks in advance for your thoughts.
__________________

Castaspey is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 12-10-2019, 08:00 PM   #2
Thinks s/he gets paid by the post
HNL Bill's Avatar
 
Join Date: Dec 2017
Posts: 1,719
So let me get this straight...from age 60 to 65, you won't have to touch your nest egg, and then from 65-70, you'll be taking $20K annually from what's now a $2.6M nest egg?

If I'm not misunderstanding what you've shared, the only thing you're missing is retirement! Go get 'em!
__________________

__________________
Balance in everything.
HNL Bill is offline   Reply With Quote
Old 12-10-2019, 08:07 PM   #3
Thinks s/he gets paid by the post
 
Join Date: Jan 2018
Location: Tampa
Posts: 4,955
Have you put your numbers into Firecalc, but just looking at your numbers from a high level, you are definitely good to go financially.
Time is more important than money, especially when the money battle has been conquered.
__________________
TGIM
Dtail is online now   Reply With Quote
Old 12-10-2019, 08:16 PM   #4
Administrator
Gumby's Avatar
 
Join Date: Apr 2006
Location: Milford
Posts: 12,663
I wouldn't call it "looking over the cliff." More like "cresting the summit" after a leg burning climb. The view is beautiful and you have a real feeling of accomplishment.
__________________
Living an analog life in the Digital Age.
Gumby is online now   Reply With Quote
Old 12-10-2019, 08:21 PM   #5
Dryer sheet wannabe
 
Join Date: Feb 2015
Posts: 17
If I understand correctly, when running firecalc you should not count your dividends and interest income as "income." This is because the dividend and interest should be considered a withdrawal from your portfolio.

Therefore you have expenses of $105k and income of $58k or a need of $47k.

That need has to be satisfied from your portfolio - which at 4% would be a withdrawal of $104k - so you are good to go. Even a hyper conservative 3% withdrawal of $78k is more than enough.
liberty53 is offline   Reply With Quote
Old 12-10-2019, 09:05 PM   #6
Dryer sheet wannabe
 
Join Date: Dec 2019
Location: Half way between the Grand Canyon and Yellowstone
Posts: 19
Quote:
Originally Posted by Gumby View Post
I wouldn't call it "looking over the cliff." More like "cresting the summit" after a leg burning climb. The view is beautiful and you have a real feeling of accomplishment.

"Cresting the summit" may be right, but I feel like my headlights are still pointed up and not giving me much of a view of the other side yet.


And my firecalc runs all turn out fine.
Castaspey is offline   Reply With Quote
Old 12-10-2019, 10:53 PM   #7
Thinks s/he gets paid by the post
jollystomper's Avatar
 
Join Date: Apr 2012
Posts: 2,300
I retired at 60 end of June last year, with few assets and income than you have, but planning to spend more than you are. Six months into retirement, my assets were down due to the market, but due to planning to cash on hand it did not impact our spending plans. 18 months into retirement, our SWR is less than half of what we thought it was, we are just 5% over our intended spending (which we chose to do intentionally, see the "Blow That Dough" thread), and our investments assets (even with a conservative AA) are over $100K higher than when I retired. So... if I can do it, you certainly can!

My DW is continuing to work part time, I did not factor this into our retirement budget so that she could choose to stop whenever she wanted. She really wanted me to retire and felt her keeping working part time would help cushion things. But after seeing me have fun for the past 18 months, and how well we have managed financially, she is planning to stop next year. So do not be surprised if your retirement inspires your wife to retire sooner than later . Good luck!
__________________
FIREd date: June 26, 2018 - wwwwwwhat a rush!
jollystomper is offline   Reply With Quote
Old 12-10-2019, 10:59 PM   #8
Full time employment: Posting here.
davebarnes's Avatar
 
Join Date: Dec 2015
Location: Berkeley, Denver, CO, USA
Posts: 936
Happy New Year.
What you are missing is: “Honey, quit on January 3rd”.
__________________
Dave Barnes
Old (71.2) Fart Nerd
AA 70/27/3, WR=3.9% (living on the edge), 95.6% retired, still working 1/4ish hrs/day
davebarnes is offline   Reply With Quote
Old 12-11-2019, 12:27 AM   #9
Recycles dryer sheets
 
Join Date: Dec 2016
Posts: 195
Quote:
Originally Posted by Castaspey View Post
"Cresting the summit" may be right, but I feel like my headlights are still pointed up and not giving me much of a view of the other side yet.


And my firecalc runs all turn out fine.
at the top of the "fourteeners" there's nothing for your headlights to bounce off of....
ages ago, when still living in CO, I'd gone up Mt Evans during the evening and ended up coming down after dark (this was ages ago when you didn't have to pay and it was open to visitors).... indeed, it's difficult to imagine your headlights really have nothing to bounce off except that small one lane (if that, sometimes) and there's a LONG way down if you mess up


we're in similar territory, but already retired with house paid off and already in deferral mode for SS.
We use a 3.5% wr as a upper limit of portfolio draw, and haven't come close to that yet. we still haven't used all the original values of the CD ladder originally set up... much less the other rungs added to it. But my pension isn't full survivor, like yours is (good for you), so you should have further confidence of a good retirement (we just had to plan on saving more for surviving spouse).

In your case, with a $105 k need, there's still a slight SORR but it's negligible given that even with a 40+% decline in equities you should be good (what's your allocation?... ours is 45% equities right now, could go higher after starting SS). I would agree with others that say that she should also be able to retire as long as you have accounted for health insurance, including all deductibles, in your numbers.
FI_RElater is offline   Reply With Quote
Old 12-11-2019, 05:52 AM   #10
Thinks s/he gets paid by the post
DrRoy's Avatar
 
Join Date: Dec 2015
Location: Michigan
Posts: 2,868
Only counting the pension against $105K need, you would be at 2.6% WR. Room for more if needed.
__________________
"The mountains are calling, and I must go." John Muir
DrRoy is offline   Reply With Quote
Old 12-11-2019, 07:43 AM   #11
Full time employment: Posting here.
 
Join Date: Jul 2013
Posts: 811
Quote:
Originally Posted by Castaspey View Post
"Cresting the summit" may be right, but I feel like my headlights are still pointed up and not giving me much of a view of the other side yet.


And my firecalc runs all turn out fine.
Sounds like it's just the anxiety of transitioning from accumulation to living off your stash. It's not uncommon.

Financially, you have no worries.
mrfeh is offline   Reply With Quote
Old 12-11-2019, 08:56 AM   #12
Thinks s/he gets paid by the post
 
Join Date: Apr 2015
Posts: 1,169
Welcome.
Looks like you and your wife could retire together without problem. If she wants to leave an unfulfilling job, why not?? Don't want any resentment building as she walks out the door and you are still home!
Retire together and get on with the rest of your lives
__________________
Give me a fish, I will eat for a day. Teach me to fish, I will eat for a lifetime.
pacergal is offline   Reply With Quote
Old 12-11-2019, 09:32 AM   #13
Thinks s/he gets paid by the post
Rianne's Avatar
 
Join Date: Aug 2017
Location: Champaign
Posts: 2,405
Just to add a bit of humor. It's like learning to swim. The best way is to get pushed into the deep end. Once there, you'll learn to float on your back, look up at the sky and clouds. You'll realize how relaxed and peaceful you feel. Jump in, the water's wonderful.
__________________
"If you want to go fast, go alone. If you want to go far, go together.
Rianne is offline   Reply With Quote
Old 12-11-2019, 09:57 AM   #14
Dryer sheet wannabe
 
Join Date: Dec 2019
Location: Half way between the Grand Canyon and Yellowstone
Posts: 19
Thanks for all of the input. This illustrates the cognitive and emotional components of retirement decision making. Cognitively I see the numbers as clearly as you all do, and they don't change regardless of the income forecaster (like firecalc) I plug them into. Mathematically, I got this. But that really does not extend into the emotional realm and allow me to be calm and comfortable just yet. It will be interesting to look back on this thread in 90 days and see where my head is at.
Castaspey is offline   Reply With Quote
Old 12-11-2019, 10:08 AM   #15
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
MRG's Avatar
 
Join Date: Apr 2013
Posts: 8,454
It's an amazing transformation that occurs. I think I was expecting the world to stop when I quit working. It was 2013 and I was expecting the next great recession only worse.

You'll be fine.
MRG is offline   Reply With Quote
Old 12-11-2019, 02:42 PM   #16
Thinks s/he gets paid by the post
HNL Bill's Avatar
 
Join Date: Dec 2017
Posts: 1,719
My cognitive dissonance is in looking at the 4% rule, and wondering, what if...what if the US hits a 20+ year recession like Japan? Even the 3.5% WR has some risk, but if you wait until you're overly safe, you've traded too many years for that extra margin of safety that likely won't be needed.
__________________

__________________
Balance in everything.
HNL Bill is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Almost went over the Subsidy Cliff doxiemama Health and Early Retirement 54 10-26-2019 04:48 PM
Move over Cliff, Move Over Carlos- Here Comes Mariah! haha Other topics 4 05-29-2008 03:14 PM
Push me off the cliff! Westernskies Hi, I am... 14 05-07-2008 11:55 AM
Like Lemmings over a cliff... Andy H Hi, I am... 96 09-27-2007 04:21 PM

» Quick Links

 
All times are GMT -6. The time now is 05:46 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2020, vBulletin Solutions, Inc.
×