Once you have your "number" does anyone recommend double checking it

Hiredgun said:
with a financial advisor? In other words, having a financial advisor run the numbers and confirm that your "number" will let you retire early.

If so, can you please provide advice on how to find a reliable financial advisor. Someone I can hire just to carry out this one task. Thanks,
Click to expand...

I was looking for the same advice about a month or two ago. Decided to
post the info. on these boards. Got a lot of good feedback vs one persons opinion.

good luck
 
Hiredgun said:
Thanks for the thoughtful replies. Looks like most people think it's not worth the time and $$$, and I get that. I'm trying to do the asset allocation and the investing on my own and I have learned alot from Bogleheads and books on personal finance (Random walk on Wall Street, Ray Lucia's Buckets, Work Less, Live More (Clyatt), Bogleheads Guide, etc.)

I invest mostly in Vanguard low cost funds and Fidelity for our 401Ks. I'm shooting for a 65% Overall Stocks (70% U.S. 30% Int'l (20 % of which is Emerg Mkts)) and 35% Bonds (VG Total Bond in 401Ks & Some VG Reits, VG Intermediate Munis outside 401K). I should be there within the next 2 years, leaning a bit heavy on stocks right now (80% Stocks and 20% Bonds right now). I hate to buy more munis right now, but I need to get to my ideal Asset Allocation. Although it seems stocks are the much better buy right now, I think AA is more important in the long run.

Expenses are conservatively estimated at $80,000 year after retiring. Shooting to retire in the next 24 months. End of 2013 at the latest. DW and I are 43 (soon to be 44).

I expect we will have around $3,000,000 by retirement and the Firecalc looks good. Just getting nervous and before pulling the plug would like to have additional affirmation, I guess. Also, I should have 2 years of expenses put away, so won't have to dip into the 3M until then. The only other wrinkle is about 2M will be outside of 401K and 1M will be stuck in 401K until we are the right age.

Outside of 401K is mostly stocks and munis. 401K is all bonds and a 15% Vanguard Reit fund.

Would appreciate any comments. I think we are about at the finish line, but of course there are no guarantees and doubts continue to make me fret. Thanks!
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You can never be absolutely certain, but raw numbers suggest odds are you will be OK. $80K/yr expenses on a $3,000K nest egg translates to a 2.67% WR (withdrawal rate). You're younger than I realized, but I've seen some smart people suggest a 3% WR is the indefinitely sustainable WR. The 4% SWR studies are based on someone retiring at age 65 so probably not applicable in your case.

And if you have a pension, retiree health care, Soc Sec and/or other income sources (eventually), your out-of-pocket annual expenses will be $80K minus retirement income and your WR will be correspondingly lower. However, it appears you could make it with no retirement income.

I think your reading list would meet with the approval of this audience, it's a very good one IMO.

You will have to develop a spending plan to deal with your age and 401k restrictions, but that's easily doable. I still don't see why you would use an FA, but that's your call. Congrats on your status so far...
 
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I think it can be useful to talk to a financial planner of whatever type if you feel uncertain, because if nothing else it can boost your confidence that you really do have all your bases covered. I met with a guy a couple years ago (he was a salesman, so my meeting was free) and he seemed capable enough working within the system that his firm used but he didn't have anything to tell me that I wasn't already aware of. He was all about asset allocation and used some kind of modeling that was less useful than firecalc.

I was happy to spend the few hours it took to get my info together and meet with him because the experience reinforced that nobody has a guarantee, and that everything I've learned here and by reading umpteen personal finance books is enough for me and will get us where we're trying to go.
 
LOL! said:
There are enough anonymous financial forums that you can probably do much better than finding an advisor to check your number.

OTOH, suppose you find an advisor, you pay them to say your number is fine, then at some point in the future, you run out of money. Can you now sue them because they gave you the wrong advice? :mad: If not, then what good is getting that advice from an advisor? They would have no skin in the game and could say anything they wanted, couldn't they?
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If Firecalc tells me I won't run out of money, and I do, can I sue this Board? :ROFLMAO::ROFLMAO::ROFLMAO:
 
FinanceDude said:
If Firecalc tells me I won't run out of money, and I do, can I sue this Board? :ROFLMAO::ROFLMAO::ROFLMAO:
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Not to worry....... FireCalc has never told anyone that they would not run out of money. FireCalc can only tell you that back-testing vs. historical data resulted in zero (or 1% or 5%, etc) failures. The author is quite emphatic that there is absolutely no predictive component to FireCalc.

If you read a FireCalc output as saying you won't run out of money in the future, sue your optometrist as you have bad glasses.
 
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youbet said:
If you read a FireCalc output as saying you won't run out of money in the future, sue your optomitrist as you have bad glasses.
Click to expand...

Isn't that "optometrist"?? :)
 
Hiredgun said:
with a financial advisor? In other words, having a financial advisor run the numbers and confirm that your "number" will let you retire early.

If so, can you please provide advice on how to find a reliable financial advisor. Someone I can hire just to carry out this one task. Thanks,
Click to expand...
Lots of good responses already. Is it just "one task" or one question do you need answered?

- How much money do we need to retire early and do we have that much?
- What is the probability our portfolio will outlive us and is that number good enough?
- How should we allocate our investment assets to minimize the possibility of outliving our assets?
 
FinanceDude said:
If Firecalc tells me I won't run out of money, and I do, can I sue this Board? :ROFLMAO::ROFLMAO::ROFLMAO:
Click to expand...

Yup, and you get back every dollar you paid in.

That's the same deal you get with an FA, right?
 
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The OP might also be interested in checking out something like the ES planner software--there is a simple free version of it you can test out online.

NAPFA is also a good resource if you want to do a full consult with a fee-only planner. I think it is pretty reasonable to want to get confirmation that what you know is right and you aren't missing some big (or small) element of the plan. If it helps you sleep at night to run it past someone with an education in retirement planning, I'd encourage to you consider the money well-spent.
 
The problem I see with the OP's question is that with a 65% allocation to stocks he's got a lot more volatility to deal with than someone who's maybe 40% stocks.
So the more volatile your portfolio, the higher your trigger number needs to be...
 
westcoast said:
The Fidelity calculator doesn't allow pensions and estimates Social Security. Pretty worthless.
There must be different Fidelity calculators for customers who log on. The one I use is very detailed and includes everything I put into Firecalc. Maybe I'm paranoid but I get a call from Fido shortly after I update my data and rerun the numbers.
Click to expand...
 
foxfirev5 said:
Maybe I'm paranoid but I get a call from Fido shortly after I update my data and rerun the numbers.
Click to expand...

It's not paranoia if everyone really is out to get [-]their hand in your pocket[/-] you.
 
TheWizard said:
The problem I see with the OP's question is that with a 65% allocation to stocks he's got a lot more volatility to deal with than someone who's maybe 40% stocks.
So the more volatile your portfolio, the higher your trigger number needs to be...
Click to expand...
I don't agree. He's doing equities at 110-age, which is not at all out of line. That's why I asked if he was going to adjust it as he got older. Since they are in their 40s they've got time to overcome a downturn, and I think it's smart to go for the potentially higher returns on stocks.
 
foxfirev5 said:
Maybe I'm paranoid but I get a call from Fido shortly after I update my data and rerun the numbers.
Click to expand...
I get e-mails from Fidelity after an update, but more importantly the stock market always drops by 15% or so the week after I do an update.
 
TheWizard said:
The problem I see with the OP's question is that with a 65% allocation to stocks he's got a lot more volatility to deal with than someone who's maybe 40% stocks.
So the more volatile your portfolio, the higher your trigger number needs to be...
Click to expand...

No NO NO

If they are going to retire in their mid 40s, they have a 45 or 50 year planning horizon. A 65% allocation to stock is a floor not a ceiling. At 80K they are probably ok no matter what there AA is. However, if we raise the spending modestly to 100K and you run FIRECalc you'll see that failures increase once AA drop to below 60% and actually hit a troubling 15% failure rate at 35/65 AA.

The current yield on Total Bond Market is 3.25% and inflation is 3.6%. Since they will have to pay say 30% taxes on interest income, they are actually losing roughly $1300 in purchasing power each year per 100K they have invested in bonds.

Given the current fixed income situation I'd be in no hurry to move his AA away from the current 80/20. Although when interest rates raises to more normal levels in the future and he wants to switch to 65/35 that maybe prudent.
 
Hiredgun said:
I expect we will have around $3,000,000 by retirement and the Firecalc looks good. Just getting nervous and before pulling the plug would like to have additional affirmation, I guess. Also, I should have 2 years of expenses put away, so won't have to dip into the 3M until then. The only other wrinkle is about 2M will be outside of 401K and 1M will be stuck in 401K until we are the right age.
Click to expand...

As is my custom, let me change the subject a few degrees. I wouldn't worry too much about not being able to get to the 401(k) money for a while. Sounds like you have plenty in savings and also in your taxable accounts to tide you over to age 59 1/2. BUT - My suggestion would be to consider your 401(k) or IRA's (if any) as smaller than their nominal value. IOW, you will have to pay taxes on all withdrawals. You may be able to titrate these withdrawals to keep the taxes low (or even non-existent if you will not be living in a tax-hell state). But, for purposes of planning, you might calculate your expected tax bite up front and adjust the numbers accordingly. If your total state/fed tax bite will be 20%, then I would think of the 401(k) as being worth only $800K.

Just a suggestion. YMMV.

Sounds like you have things well in hand. You are that individual I think of when I hear the term "Early Retirement". I didn't ER until 58. Arguably, that is early. But 43/44 is DEFINITELY early. Congrats and good luck!:)
 
Here are a few other things a good FA should ask about (other than your "number"). Are you and your wife capable of cutting back should there be a prolonged downturn in the markets? Do you live beneath your means, and enjoy doing so? Can you go back to work if necessary? Do you have a plan for health insurance? Have you considered taxes in your $80,000 of annual spend? And finally, at your youthful age - have you considered what you would do if you don't enjoy ER as much as you think (blasphemy here, I know, but you still have to consider this)?

Good luck!
 
Thanks for all the thoughtful responses. And yes, we have health care covered. We each have private policies through BC/BS, we bought these for all of our employees. That way, the employees can take them with them when they go to another job (or they can just stop paying for them and they will expire, we currently pay them for the employees). Once we retire, we can just keep our private policies in effect until medicare kicks in.

And yes, we currently live below our means and I expect we can cut back fairly significantly once my son (now 13) goes off to college. House is paid off and we have fairly inexpensive hobbies (library, movies, Eurpoean board games, garage sales, some travel, cooking at home). Work is stressful enough that it'll be nice to just get off the wheel for a while and figure out what to do.
 
It sounds like you have a well thought out plan. Financially, you should be good to go. Enjoy the ride:dance:
 
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