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One Bad Day Away From Retirement
Old 03-04-2016, 01:11 PM   #1
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One Bad Day Away From Retirement

I think I’m at the point I just need a good excuse to quite working. One really bad day at work will probably be the trigger to quite. The problem is once you are FI, it seems like there are less things to piss you off because you are able to say no.

Financially we have a nest egg a little over 20 times our current income. We’ve always lived within our means, so living on 4% of our savings shouldn’t be too much of a stretch. I know the right way is to track our expenses and make a budget, but I guess I’m just too lazy or too conservative. It seems whenever I make a retirement budget, I can justify a lot of additional optional spending (travel, college, weddings, grandchildren, etc.). It’s so easy to get into the OMY mode.

We’ve always been able to save first and live comfortably on the remaining amount. I’m not sure why retirement would be any different. We do have an income over $100k/year in a low cost of living area, so there is plenty of room to tighten our belt if/when needed.

I’m still relatively young at 50. Our oldest child will be graduating state college in about 1 year. He is currently planning on going to grad school. We’ve helped him thru college so that he has $0 debt so far. I’m thinking grad school should be at his cost. Our youngest child will be graduating high school in about 1 year. She plans on going to college. We’ll help her thru a 4 year program just like her brother. We already have a 529 plan which will cover about half the cost for a state college.

I general do like my work and the people I work with. I started with the company about 30 years ago as the new kid and now I’m one of the old guys. Mega Corp is currently going thru a major restructuring which for the most part I’m ignoring. After a few restructurings, I view them mostly as a move to reenergize the employees to be more profit focused by doing X. So far none of the previous restructurings have made my work life change for the better or worse. I don’t see the current restructuring being any different than the previous ones.

Work has been a little slow lately. So I’ve been unofficially going to reduce time/telecommuting on my own terms. Lately a typical week has been three full days/week in the office and two part time days at home. So I work about 32 hrs. and take about 8 hrs. of PTO so that my pay stays at a 40 hr week. The work is getting done and the department manager seems to be happy. At this rate, I have about 1 year before I run out of PTO. At that time I may just unofficially go to reduced time/pay to see if anyone objects.

Who knows? Maybe work will continue to be slow and they decide to either let me go so I can collect unemployment or offer an early retirement package.

Here’s hoping for a really bad day.
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Old 03-04-2016, 01:19 PM   #2
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I just re-read some of your previous posts and you seem firmly set into OMY syndrome. Have you gone through the questions here to see if you might really be ready to hang it up:

Some Important Questions to Answer Before Asking - Can I Retire??

Also I highly recommend the Ernie Zelinski books for helping get over OMY (if indeed you are ready for that.)

There's a current thread on retiring with teenagers at home that you might also find interesting.

Hope you have your really bad day soon
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Old 03-04-2016, 01:20 PM   #3
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The last 4 or more years that I worked I was on a reduced hours schedule... initially 80%, then 50%, then bumped back up to 80% for a special project for a client and then back to 50%. Under our program, virtually everything other than health insurance was proportional (80% of pay, etc.) except for health insurance which was all or none with 50% being the threshold.
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Old 03-04-2016, 03:58 PM   #4
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After 29 years all it took was the insanity attacking my VP and he welcomed it! Really buddy when did you get stupid? I couldn't stand to watch anymore.

Hope you find your I'm done event.
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One Bad Day Away From Retirement
Old 03-04-2016, 05:16 PM   #5
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One Bad Day Away From Retirement

Hate to be a buzz-kill but it's supposed to be 25 times your expenses to sustain a 4% SWR.
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Old 03-04-2016, 07:18 PM   #6
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Originally Posted by Brian View Post
Who knows? Maybe work will continue to be slow and they decide to either let me go so I can collect unemployment or offer an early retirement package.

Here’s hoping for a really bad day.
A really, really bad day is not necessary! You could quit any time!
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Old 03-04-2016, 08:26 PM   #7
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Hate to be a buzz-kill but it's supposed to be 25 times your expenses to sustain a 4% SWR.
If you are referring to OP's statement, I believe he mentions that he has a little over 20 times annual income available, which presumably well positions him for a 4 percent withdrawal of annual expenses (i.e., presuming annual expenses are significantly less than annual income). My bet is that he is in a very good position, but he can speak for himself, of course.
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Old 03-04-2016, 10:17 PM   #8
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If it is 20 times in $100k+ income that would be $2 million and at 4% that would mean $80k before considering SS or any pensions so he should be all set since probably at least $20k a year is probably leaking away to pay FICA, OASDI and income taxes.
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Old 03-05-2016, 05:26 AM   #9
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Thanks for the responses. I have been using the lazy man's budgeting rule of thumb that retirement budget is typically about 80% of your current expenditures to get to 4% withdrawal ($ X 80% X 25 = $ X 20). Since we save a good chunk of our income, our actual current expenses are less than 80% of our current income. So assuming we spend the same in retirement as we currently do, we would still be less than 4% withdrawal.
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Old 03-05-2016, 07:28 AM   #10
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Thanks for the responses. I have been using the lazy man's budgeting rule of thumb that retirement budget is typically about 80% of your current expenditures to get to 4% withdrawal ($ X 80% X 25 = $ X 20). Since we save a good chunk of our income, our actual current expenses are less than 80% of our current income. So assuming we spend the same in retirement as we currently do, we would still be less than 4% withdrawal.
That may be the case, but you need to document your expenses in detail, ideally over two years, to be quite sure. You can do this retrospectively, and then you can project forward and develop a retirement budget. While some expenses will decrease in retirement, others may increase. The 80% rule is a crude approximation that is often quite wrong.
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Old 03-05-2016, 07:39 AM   #11
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Thanks for the responses. I have been using the lazy man's budgeting rule of thumb that retirement budget is typically about 80% of your current expenditures
I don't believe this is the lazy man's budgeting rule of thumb for retirement budgeting.
I am reluctant to post the "rule" because it is just more financial advisor type BS, probably designed to delay retirements and fatten advisors' wallets. But in the interest of full disclosure the useless rule is that in retirement one needs to generate income that is 80% of current income. Not 80% of current expenses. This "rule" assumes that around 20% of current income goes to saving for retirement, working man's taxes, and work related expenses like commuting, dry cleaning suits, etc. Once you retire you don't save for retirement, your taxes go down, and work expenses disappear.
The "rule" assumes you spend the other 80% and will continue to do so.
Fahgedduhboutit.
Only you know what your expenses are now, and for many people it is far less than 80% of their current income. In my home it was closer to 25%.

The trick is figuring out what your expenses WILL BE.

In retirement, expenses can go up! More travel? What about health care? New hobbies? And of course, don't forget to leave a fudge factor for the unexpected. If you find any of my other posts around here you will see that while I absolutely love retirement, the first year or two could still have been titled, "A Series of Unfortunate Incidents." (Long story, short - lots of stuff broke, unexpected health and dental incidents,etc) Unfortunate Incidents, but affordable, thanks to budgeting extra for miscellaneous.

When I had a big salary, I found thinking about expenses and budget too much trouble. It's true, big salaries allow you the luxury of not having to think about it. There is always more coming in. But once you take the plunge, (unless going back to work is a simple and easy thing) even if you have a big fat 7 figure nest egg, you probably want to have some idea of how much it's gonna cost you to live in retirement. And somewhere in the back of your mind, you know this. "Not thinking about something" is a good way for that something to weigh on your mind MORE! The time you can stop thinking about a problem is after you think it out as completely as you can.


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Old 03-05-2016, 10:54 AM   #12
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Thanks for the responses. I have been using the lazy man's budgeting rule of thumb that retirement budget is typically about 80% of your current expenditures to get to 4% withdrawal ($ X 80% X 25 = $ X 20). Since we save a good chunk of our income, our actual current expenses are less than 80% of our current income. So assuming we spend the same in retirement as we currently do, we would still be less than 4% withdrawal.
I would find it 1000 times easier to figure out my expenses than I would to waste another year of my life at work for nothing.
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Old 03-05-2016, 11:01 AM   #13
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4% is an aggressive withdrawal rate if you are only 50. I'd look more in the 3-3.25% range for a withdrawal rate if retiring at 50.
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Old 03-05-2016, 01:17 PM   #14
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Old 03-05-2016, 01:51 PM   #15
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Consider going through this checklist before pulling the plug:

https://www.bogleheads.org/forum/vie...rt=50#p2786486
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Old 03-05-2016, 05:08 PM   #16
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Consider going through this checklist before pulling the plug:

https://www.bogleheads.org/forum/vie...rt=50#p2786486
That looked like WAY too much analysis to me and I'm an analytical type!

My last day at the office was exactly one week after the day that led me to decide to ER. Our situation was a bit different; I was 61 and DH was 74, kids from 2 previous marriages out and on their own years ago. Here were the deciding factors:

1. We spent a lot less than we made. (DH was retired years before but collecting SS.) The 80% of income rule made little sense for us because we were saving maybe 40%.

2. Our fixed expenses were pretty small. Mortgage was $860, property taxes were a little under $400/month. No credit card debt. We were paying off a loan from our HELOC to purchase a (used) car but the minimum due was interest only. So, if we had to cut back in a bad market year we didn't need much for basic living. Our big extravagances, travel and charitable donations, could be cut back if needed.

3. A 4% withdrawal rate would more than cover our expenses plus extravagances not covered by SS and my $1K/year pension from a previous job. We kept it under 4% the first year, went over that the year we moved, and will definitely be under 4% for 2016 unless something really disastrous happens. (We replaced the furnace in the 20-year old house we bought when we moved last year and just replaced the A/C. I guess one of the cars could die. I hope that doesn't happen for awhile.)

4. I plan to postpone SS till age 70 so expect withdrawal rates to be less after that.

Bottom line- you may not need to over-analyze it. If your fixed expenses are low and you've got the cushion to weather shocks, you may be OK. Do look into healthcare costs, though. Even with DH on Medicare, that's a big line item in our budget and you need to be prepared for it.
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