Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 02-21-2013, 04:27 PM   #21
Moderator Emeritus
 
Join Date: May 2007
Posts: 11,036
Quote:
Originally Posted by NanoSour View Post
OK,

I ran what numbers I do know through ESP and you look to be in very good shape.

ESP suggests a living standard of 23,257 per household adult. For your household you would multiply times appx 2.6 to get household discretionary spending. Discretionary spending does not include fixed housing costs (PITI), college cost, nor taxes.

For your situation, discretionary spending is 60,500 until 2026 when I have the children starting to leave the household.

My assumptions were $25K/year per child for college.
SS at age 62
1.4 all taxable as I didn't know the breakdown of assets.

This number is conservative as the calculated taxes were considerably higher than I imagine they will be due to tax advantaged accounts.

I think you are all set.
The free ESPlanner does not give me the option to retire before the age of 50. What version do you run if I may ask?
__________________

__________________
FIREd 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 02-21-2013, 04:29 PM   #22
Full time employment: Posting here.
 
Join Date: Jan 2008
Posts: 609
I have ESPlanner Plus. Paid version. Find it extremely useful in making my decision to ER this coming summer.
__________________

__________________
NanoSour is offline   Reply With Quote
Old 02-21-2013, 04:32 PM   #23
Moderator Emeritus
 
Join Date: May 2007
Posts: 11,036
Quote:
Originally Posted by NanoSour View Post
I have ESPlanner Plus. Paid version. Find it extremely useful in making my decision to ER this coming summer.
Thanks. I'll look into it.
__________________
FIREd is offline   Reply With Quote
Old 02-21-2013, 04:55 PM   #24
Recycles dryer sheets
 
Join Date: Jan 2013
Location: Camas, WA
Posts: 96
Interesting thread. My experience is that the social security calculator assumes that you are making a salary identical to your current salary until you start drawing. Check the fine print on that before you decide for sure. I share your concern about trading money for time with the kids. Good luck!
__________________
cinman2000 is offline   Reply With Quote
Old 02-21-2013, 05:10 PM   #25
Moderator
rodi's Avatar
 
Join Date: Apr 2012
Location: San Diego
Posts: 8,804
Quote:
Originally Posted by cinman2000 View Post
Interesting thread. My experience is that the social security calculator assumes that you are making a salary identical to your current salary until you start drawing. Check the fine print on that before you decide for sure. I share your concern about trading money for time with the kids. Good luck!
There are ways to show your SS estimate with fewer years. You have to enter zero's into the years between retirement and SS age. (It takes a little poking around to find that mode - but it's there on the estimator calculator.)
__________________
rodi is offline   Reply With Quote
Old 02-21-2013, 05:19 PM   #26
Full time employment: Posting here.
 
Join Date: Jan 2008
Posts: 609
Quote:
Originally Posted by cinman2000 View Post
Interesting thread. My experience is that the social security calculator assumes that you are making a salary identical to your current salary until you start drawing. Check the fine print on that before you decide for sure. I share your concern about trading money for time with the kids. Good luck!
That's a great point cinman. I took the OPs SS estimate as correct; however, you are correct that the estimate that SSA sends you does assume continued income at the current level.

If you download the AnyPIA program from the SSA website, it does let you put zero income for future years and give a pretty good, although conservative estimate.

ESP does account for zero future earning in its SS estimates and spending calculations. One of the reason I like the software.
__________________
NanoSour is offline   Reply With Quote
Old 02-21-2013, 05:41 PM   #27
Thinks s/he gets paid by the post
obgyn65's Avatar
 
Join Date: Sep 2010
Location: midwestern city
Posts: 4,061
Good to go then.
Quote:
Originally Posted by FUEGO View Post

Good question.

100% success.

.
__________________
Very conservative with investments. Not ER'd yet, 48 years old. Please do not take anything I write or imply as legal, financial or medical advice directed to you. Contact your own financial advisor, healthcare provider, or attorney for financial, medical and legal advice.
obgyn65 is offline   Reply With Quote
Old 02-21-2013, 08:42 PM   #28
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Nov 2007
Posts: 7,526
Quote:
Originally Posted by Kabekew View Post
Several things stand out to me:
...snip...

Car and homeowners insurance are missing in your budget, or is that rolled into something else?

Also I don't see car repairs in there. It looks like you're thinking of one new car every 10 years? You'll need to account for maintenance. Also is that realistic for a growing family?

House maintenance I think is low if you're trying to include depreciation in that -- eventually you'll need a new furnace, maybe new windows, new roof, appliances, and probably at some point want to update furniture, carpet, etc. $1500 a year won't cover all that, I think.

So, I think your fixed budget will be higher than you think, and above a safe withdrawal rate (especially considering you need it to last 50-60 years!). You have to be careful not to be too rosy-eyed and assume too much in the excitement of possibly making it work, only to run into problems and need to return back to the workforce a lot older, out of skills and with a long gap in your resume. I'd be really cautious with your numbers!
I should have included my full budget based on our historical spending from the last few years.
Here is the summary of our expenses that I have wrapped into "baseline" expenses of $23,000 in my first post (I rounded up from $21,698):

Expense Amount
1. House-Mortgage $-
2. House - repairs/maintenance (incl. appliances/repairs) $635
3. House - insurance/taxes $1,933
4. Utilities-Gas/Electric $1,757
5. Utilities-Water/Sewer/Trash $862
6. Utilities-Cable TV $-
7. Home Furnishings/ Furniture $243
8. Communications - Phone/Cell Phone/Internet $724
9. Auto-maintenance/insurance/taxes/license/regis. $1,466
10. Auto-gas/tolls $2,128
11. Medical/Dental $1,493
12. Clothing $651
13. Groceries/Household (Walmart, Target, Grocery Store) $5,851
14. Student Loan Payments $-
15. Education/Training/Prof Fees $-
16. Childcare/Afterschool care $-
17. Dining out $1,042
18. Entertainment/Toys/Fun (incl. ABC store) $773
19. Vacations $-
20. Electronics $769
21. Gifts $1,243
22. Charity $-
23. Misc. $118
24. Cash $10
TOTAL: $21,698
 

I have a separate spreadsheet that calculates and annualizes the replacement cost of HVAC, paint inside and out, roofing, hot water heater, flooring (carpet/hardwood/tile), etc based on average service lives and average cost per item. It works out to around $1500. I added this in on top of the $635 per year we have been spending on other house repair/maintenance/yard expenses. I may need to set aside an extra $10k or so as a lump sum at ER since the HVAC, roof, and hot water heater will be approaching the end of their average service lives (but show no signs of imminent failure right now).

Our furniture/household furnishings expenses was $243 per year historically. Most furniture that we have has been hand me downs or freebies in great condition, or we built or modified ourselves. That $243 may be a little low, however our current problem is a surplus of furniture, not a deficit.

As for cars, I figure something along the lines of buying a $12000 car that is 5-6 years old, then driving it for 10 years and selling it for maybe a few thousand. So around $1000 per year to repeat this over time (x2 cars). With 5 of us, we might need to upgrade in size from our honda sedans we have now although they work just fine for our purposes. And we could probably get by with 1 car if we weren't both working. We live in the city, so many errands can be completed on foot, or on bike. And our bus system is decent and cheap ($1/trip) though DW won't ride it most likely. Very convenient 10 minute ride to downtown (where I work now and used to ride the bus when it was free for me). When the kids are on our dime and driving, costs will spike, so I threw an extra $2000 per year (forever) into our spending plan to account for at least a few years of very high insurance rates and having a car available for them to use.
__________________
Retired in 2013 at age 33. Keeping busy reading, blogging, relaxing, gaming, and enjoying the outdoors with my wife and 3 kids (5, 11, and 12).
FUEGO is offline   Reply With Quote
Old 02-21-2013, 09:41 PM   #29
Full time employment: Posting here.
 
Join Date: Dec 2010
Location: Southern California
Posts: 916
I wish I had that budget.

Nice budget and tracking... with a few more years experience/budget confirmation, you'll be golden... confirming your family is happy with that lifestyle. With that budget, Firecalc 100% success, and cushion, you should be great.

Some personal choices -
Kids' activities - I spend extra on school photos, fundraising, just stuff....
Any $$ factored in for extra cars/insurance when the kids are older?
Wedding fund ok, but what about spoiling grand kids fund? ;-)

I'm older, 44 soon, but you just set the bar for me. I need to dive into my budget more as I'm increasing spend as I want to enjoy/spoiling kids more now ... reaching FI late last year and downshifted to contract work.

Good job!
__________________
Aiming_4_55 is offline   Reply With Quote
Old 02-21-2013, 09:53 PM   #30
Thinks s/he gets paid by the post
Live And Learn's Avatar
 
Join Date: Feb 2012
Location: Tampa Bay Area
Posts: 1,689
I wish I had that budget too !!!! My budget is 87k (of which 28k is HI / Medical and 6k is Federal Income tax) which leaves me with 53k for everything else. I too have no mortgage. I guess I'm just totally spoiled and haven't really been as frugal as I thought I was.

Looks like you're in good shape ! congrats
__________________
"For the time being no discipline brings joy, but seems grievous and painful; but afterwards it yields a peaceable fruit of righteousness to those who have been trained by it." ~
Hebrews 12:11

ER'd in June 2015 at age 52. Initial WR 3%. 50/40/10 (Equity/Bond/Short Term) AA.
Live And Learn is offline   Reply With Quote
Old 02-21-2013, 09:55 PM   #31
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Nov 2007
Posts: 7,526
Quote:
Originally Posted by NanoSour View Post
OK,

I ran what numbers I do know through ESP and you look to be in very good shape.

ESP suggests a living standard of 23,257 per household adult. For your household you would multiply times appx 2.6 to get household discretionary spending. Discretionary spending does not include fixed housing costs (PITI), college cost, nor taxes.

For your situation, discretionary spending is 60,500 until 2026 when I have the children starting to leave the household.

My assumptions were $25K/year per child for college.
SS at age 62
1.4 all taxable as I didn't know the breakdown of assets.

This number is conservative as the calculated taxes were considerably higher than I imagine they will be due to tax advantaged accounts.

I think you are all set.
That is reassuring that the ESP calculator indicates success, and with somewhat higher spending than we plan on. Thanks for running the analysis for me!
__________________
Retired in 2013 at age 33. Keeping busy reading, blogging, relaxing, gaming, and enjoying the outdoors with my wife and 3 kids (5, 11, and 12).
FUEGO is offline   Reply With Quote
Old 02-21-2013, 10:15 PM   #32
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Nov 2007
Posts: 7,526
Quote:
Originally Posted by rec7 View Post
What are your utilities and food each month? That is not in the 23k above. How much money do you have in taxable? Can you make it to 59.5 with your taxable money. I am guessing you have a super low income so as to get pell grants for the kids in college.
See my budget I just posted. Utils are broken out, as is "groceries/toiletries". Groceries represent the single largest non-discretionary expense at around $6000 per year, but we enjoy a pretty good variety of foods (lots of local ethnic foods), and love to cook. Eating out is accordingly low in cost since we cook a lot and don't eat out too much.

Taxable accounts hold about 27% of our investments, with the bulk of the remainder in 401k/457/trad IRAs, and a small part in Roths. For modeling purposes, I optimized the withdrawals at around 80% from taxable, 20% from 457 (which you can withdraw from at any time). Then another chunk of change of Trad IRA to Roth IRA conversions to use up our 0% bracket each year. Taxable accounts are mostly basis now, and very little gain. Taxable accounts will shrink but never be depleted, and at around year 12 of our ER plan, we switch from pulling 80% of spending from taxable to 30% from taxable, and 50% from Trad IRA 72t withdrawals (balance from 457). This is all based on guestimates for rates of returns, and optimized for current tax laws. So pretty rough, but it gives us a good idea of tax implication and where to pull funds from first.

Yes, taxable income will be very low. I don't think our kids will qualify for Pell grants because of our assets.
__________________
Retired in 2013 at age 33. Keeping busy reading, blogging, relaxing, gaming, and enjoying the outdoors with my wife and 3 kids (5, 11, and 12).
FUEGO is offline   Reply With Quote
Old 02-21-2013, 10:21 PM   #33
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Nov 2007
Posts: 7,526
Quote:
Originally Posted by Aiming_4_55 View Post
I wish I had that budget.

Nice budget and tracking... with a few more years experience/budget, you'll be golden confirming your family is happy with that lifestyle. With that budget, Firecalc 100% success, and cushion, you should be great.

Some personal choices -
Kids' activities - I spend some on school photos, fundraising, just stuff....
Any $$ factored in for extra cars/insurance when the kids are older?
Wedding fund ok, but what about spoiling grand kids fund? ;-)

I older, 44 soon, but you just set the bar for me. I need to dive into my budget more as I'm increasing spend as I want to enjoy/spoiling kids more now ... reaching FI late last year and downshifted to contract work.
$2k/yr extra "when they are older" kids expenses - mainly insurance. That is a permanent expense so will likely be plenty most years and not nearly enough the 2-3 years we will have 2 inexperienced drivers. Additional insurance rate increases due to dumb stuff like tickets will be cost shared by the kids (100% their cost, 0% mine lol).

Then the $2k becomes grandkid spoiling money once my kids are late 20's and married hopefully.

We do little stuff for them like school pics, yearbook, PTA, donating supplies, field trips, etc. And of course fun stuff goes in the "toys/entertainment/fun/liquor" category.
__________________
Retired in 2013 at age 33. Keeping busy reading, blogging, relaxing, gaming, and enjoying the outdoors with my wife and 3 kids (5, 11, and 12).
FUEGO is offline   Reply With Quote
Old 02-21-2013, 10:23 PM   #34
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Nov 2007
Posts: 7,526
Quote:
Originally Posted by cinman2000 View Post
Interesting thread. My experience is that the social security calculator assumes that you are making a salary identical to your current salary until you start drawing. Check the fine print on that before you decide for sure. I share your concern about trading money for time with the kids. Good luck!
Quote:
Originally Posted by rodi View Post
There are ways to show your SS estimate with fewer years. You have to enter zero's into the years between retirement and SS age. (It takes a little poking around to find that mode - but it's there on the estimator calculator.)
I think I did the online advanced calculator and zeroed out income past 2015. I used old salary numbers so it is probably a low estimate. The SS results were from 3 years ago. Working 20 more years doesn't benefit SS payouts as much as you would think.
__________________
Retired in 2013 at age 33. Keeping busy reading, blogging, relaxing, gaming, and enjoying the outdoors with my wife and 3 kids (5, 11, and 12).
FUEGO is offline   Reply With Quote
Old 02-21-2013, 10:31 PM   #35
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Nov 2007
Posts: 7,526
Quote:
Originally Posted by Kabekew View Post
Several things stand out to me:

$2,500 a year medical & dental for a family of five? You're going to need a private plan and I think it'll be about five times that. Have you priced some plans at ehealthinsurance.com?

Free school lunches (and medicaid if that's why you were assuming such low medical costs) -- qualification is based not just on income but total assets, and I don't think $1.4 million in liquid assets will let you qualify.

Forgiveness of student loans -- doesn't that require full time employment in a qualifying non-profit or government agency? So, basically quit your well-paying job (I'm guessing) to work at a non-profit for $40K a year just to save the monthly loan payment? Doesn't make sense.

Taxes -- you need to include property taxes. Also when you withdraw you'll need to pay taxes on the gains. My federal & state tax bill has been about 13-16% of my annual withdrawal the past few years, just as a comparison.
Obamacare = cheap health insurance for our "low income" family with low out of pocket maxes.

From my research, which could be wrong, the kids will get free dental care through the state medicaid Children's Health Insurance Program. No asset test, just income, which we will easily meet, unless they have a new test for source of income (like cap gains or divs or 457 withdrawals meaning you are excluded from coverage).

Free school lunches have an income test, and no asset test as far as I can tell. I also recall you get it if you qualify for other benefits, possibly the free dental care. Either way, no biggie in the budget - just a little gravy. We'll probably pack the kids' lunches more anyway when we have more time. Or bring hot food and eat with them occasionally.

I have current tax law modeled pretty well, and fed taxes will be minimal, particularly while we have kids in the house. State taxes are another story, but not too bad, and current state political climate suggests income taxes will probably decrease. Overall a minimal expense and directly correlated to portfolio success, so if I owe more taxes, I'll have way more to pay them.

As for student loan repayment, I addressed that in one of the first posts on this thread. The 25 year income based repayment plan has no work requirement, and no imputed income. The 10 year Public Service Loan Forgiveness does mean you have to work in a qualified position (non-profit or govt generally speaking) for 10 years then they waive the debt. I work in one of those, but didn't sign up for a few reasons (like I can't fathom working for this employer for 8 more years).
__________________
Retired in 2013 at age 33. Keeping busy reading, blogging, relaxing, gaming, and enjoying the outdoors with my wife and 3 kids (5, 11, and 12).
FUEGO is offline   Reply With Quote
Old 02-21-2013, 11:06 PM   #36
Full time employment: Posting here.
 
Join Date: Jun 2006
Posts: 926
Your plan looks pretty good to me but what if everyone your age with a large income learns about it and decides to follow in your footsteps? If the politicians were to figure it out they would have to change from our current income based tax system to an asset based tax system.
__________________
CW4, USA-(ret)
RN, BSN-(ret)
jclarksnakes is offline   Reply With Quote
Old 02-21-2013, 11:23 PM   #37
Confused about dryer sheets
 
Join Date: Sep 2012
Posts: 7
Fuego - Our budget is similar to yours (a little higher), and savings just a little higher. I was 35 when I pulled the plug. Here is what I noticed: Gas expenses and utility expenses went up. Utilities because we heat the house during the day now. Gas (fuel) expenses went up because we're doing more stuff. Firecalc says you (and we) are OK, but I still worry because it has only been a year, and it has to last so long. Having pulled the plug, I kind of wish I stayed longer: I liked my job, and maybe I would worry less if there were a larger buffer. Sure, Firecalc says OK, but projecting that many years is pretty hard. Of course, it is hard to know exactly when to do it; now is a good time to be spending with your kids. I hope you have concrete plans of what you will do once you're not w*rking any more. It is especially hard for me: all of my friends are excited about their careers, doing interesting things, and I sometimes can't help but wish that I was helping w*rk on the "next big thing" from time to time. You've probably heard this before too... If I could do it over again, I would have asked the boss for some major vacation(s) so I could "test the waters" of retirement. 35 is pretty young to retire. Of course, you may be different! I hope my reply helps in some way.
__________________
fulm is offline   Reply With Quote
Old 02-21-2013, 11:25 PM   #38
Recycles dryer sheets
inky's Avatar
 
Join Date: Apr 2009
Posts: 125
Great post and your plan seems very thorough.

I would consider adding a little more buffer to your savings to account for lifestyle inflation. Twenty years ago no one had cell phones or Internet service. Now, few of us would want to live without them. In another twenty years, it'll be robot maids and hologram communications.
__________________
inky is offline   Reply With Quote
Old 02-21-2013, 11:44 PM   #39
Recycles dryer sheets
 
Join Date: Nov 2011
Posts: 127
How will you occupy your time, and will those activities add to costs?

Not sure about opinion of others, but anyone with $1.4 million in asset planning to feed their kids on free lunches is just wrong - on many levels. Ditto for planning 'free' dental for the kids. That means we pay for you, again when you have more than enough assets - wrong again.
__________________
Malcolm2 is offline   Reply With Quote
Old 02-22-2013, 04:54 AM   #40
Confused about dryer sheets
 
Join Date: Apr 2009
Posts: 7
Very interesting! Fantastic budgeting. Is your wife on board with that budget for 60 years?

William Bernstein suggests 2% withdrawal rate is iron clad for those retiring under 65 and 3% is "probably" safe. Would your career lend itself to re-entry down the road?
__________________

__________________
yukon 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


 

 
All times are GMT -6. The time now is 02:12 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.