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Old 08-09-2018, 09:04 AM   #21
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Originally Posted by mountainsoft View Post
Obviously, your expenses will determine how much money you need to live on. Your numbers caught my eye because our total expenses will be less than 40K per year INCLUDING healthcare, travel, cars, and home repairs. Your numbers seem high to me, but maybe we have different lifestyles and expectations.

Do you really spend $15K each year on cars, home repairs, etc? We generally spend less than $2000 per year on our cars AND home repairs, but we tend to do most things ourselves. With $15K I could buy a new used car every year. I might need to spend $15K for a new roof or a remodel, but that's a one time expense I can spread out over time.

I'm also curious what kind of traveling you'll be doing that will cost $25K per year? We typically spend $3000 or less per year on travel, but we tend to stay close to home and won't be taking cruises or traveling the world.

Sorry, I don't have anything useful to add, I just thought those expense numbers were interesting.
Great questions. I'm not sure I can answer them in with great detail as this is all in the planning stages, but I will provide more info.

This is the base $75k plan. This is based on our current spending (sorry for the formatting issues, it's a cut and paste from excel):

BUDGET Monthly Annual
AUTO FUEL 150 1,800.00
AUTO SERVICE 75 900.00
CLOTHES 300 3,600.00
DOGS / CATS 200 2,400.00
FOOD 700 8,400.00
DINING 700 8,400.00
HEALTH / BEAUTY 300 3,600.00
HOUSE MAINT 250 3,000.00
ENTERTAINMENT 200 2,400.00
MEDICAL 500 6,000.00
LUMPY STUFF 365 4,376.00
MISC 750 9,000.00

TOT DISC 4,490 53,876

HOUSE Tax&Ins 767 9,204.00
LIFE INSURANCE 220 2,640.00
CELL PHONE 150 1,800.00
CABLE 141 1,692.00
ELECTRIC / GAS 150 1,795.80
WATER 110 1,320.00
INTERNET 64 762.24
AUTO INS 150 1,800.00

TOT NON-DISC 1,751 21,014

TOTAL EXP 6,241 74,890


The 20% on top of that is arbitrary. I don't have a specific purpose for it other than to spend it on large purchases not in the $75k. If I don't hit any sequence of returns (SOR) risk, I can spend it on whatever. If the market is not kind that year, it can sit in savings.

$25k in travel is a guess. We usually spend $15k now. But have gone as high as $35k. That is for a family of 4 with all 4 going. Sometimes with an extra friend or relative.

As @donheff mentioned, I need to be willing to flex down to $75k if SOR bites me early on. With $25k travel and $20k of cushion, I think I am ok with that.
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Old 08-09-2018, 09:13 AM   #22
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The $500 per month medical is surprising to me. Will you have retiree healthcare? Does that also include dental? I'm guessing it's not for ACA subsidized since your income would appear to be too high but maybe you're using after tax dollars to live on.
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Old 08-09-2018, 09:17 AM   #23
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Really? Wow, I need to get out more. I don't think we've ever spent more than $4K on a vacation, including trips to Hawaii, Puerto Vallarta, Canada, and Alaska. When we take a big vacation like that, we don't really do any other major traveling that year. I'm hoping to travel more once we retire, but I can't imagine spending $25K per year. That's awesome if you can afford to do it, but I don't think that's in the cards for us.
One of our $33k vacations was renting a house on a private island for 5 of us. Worth every penny to us, but you could replicate it in a similar fashion for a LOT less. Private drivers, planes and boats were involved.

Another $35k vacation started at $10k for 7 days in Europe. That turned into 33 days. We had a blast.
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Old 08-09-2018, 09:20 AM   #24
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The $500 per month medical is surprising to me. Will you have retiree healthcare? Does that also include dental? I'm guessing it's not for ACA subsidized since your income would appear to be too high but maybe you're using after tax dollars to live on.
I have military retiree healthcare called Tricare for life. It is dirt cheap right now and turns into a free Medicare supplement @ 65. That's why I thank everyone for taking care of us veterans.

That $500 is for co pays, dental and vision.
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Old 08-09-2018, 02:09 PM   #25
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One of our $33k vacations was renting a house on a private island for 5 of us. Worth every penny to us, but you could replicate it in a similar fashion for a LOT less. Private drivers, planes and boats were involved.

Another $35k vacation started at $10k for 7 days in Europe. That turned into 33 days. We had a blast.

At $1k/day I would hope you had a blast. Were you literally burning rocket fuel?
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Old 08-09-2018, 02:52 PM   #26
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I think your plan makes sense with one little exception.... your are essentially using a 4% WR at age 55, not age 70.... probably not a huge deal, but I think a WR a little south of 4% would be preferable at age 55.

Also, you are assuming that the $798k side fund will grow at inflation so the withdrawals can be increased with inflation but that is probably not a hugely bad assumption.

If I input into FIRECalc and solve for spending at the 95% success rate, I get ~$133k... which is the same as your plan but using a 3.5% WR rather than 4% due to the 10 year early start.
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Old 08-09-2018, 04:40 PM   #27
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I think your plan makes sense with one little exception.... your are essentially using a 4% WR at age 55, not age 70.... probably not a huge deal, but I think a WR a little south of 4% would be preferable at age 55.

Also, you are assuming that the $798k side fund will grow at inflation so the withdrawals can be increased with inflation but that is probably not a hugely bad assumption.

If I input into FIRECalc and solve for spending at the 95% success rate, I get ~$133k... which is the same as your plan but using a 3.5% WR rather than 4% due to the 10 year early start.
I agree completely with your thoughts. 4% WR starting @ 55 is on the aggressive side.

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At $1k/day I would hope you had a blast. Were you literally burning rocket fuel?
That made me giggle. I told my wife when we got back that she should write a book on how to scrimp by on $1k a day in Europe.
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Old 08-10-2018, 10:16 AM   #28
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First class airfare can help spend that $1k/day if the trip isn't very long.
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Old 08-11-2018, 12:59 PM   #29
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Why do you have life insurance? Just curious, since it appears your home is paid off.
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Old 08-12-2018, 05:13 AM   #30
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Why do you have life insurance? Just curious, since it appears your home is paid off.
I am not FI yet and my life insurance insures that my wife will be FI if I die. And we are carrying a mortgage right now, so it helps with that.
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Old 08-12-2018, 05:44 AM   #31
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Your estimate for SS seems a little high, unless that is the total for both spouses. If so, have you accounted for that total decreasing when one of you dies?
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Old 08-12-2018, 10:49 AM   #32
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Your estimate for SS seems a little high, unless that is the total for both spouses. If so, have you accounted for that total decreasing when one of you dies?
You are correct that the SS number is for both people. My wife has no earnings record, so that is my benefit @ age 70 and her spousal benefit.

The life insurance is there to help cover the pension going down to 55% and losing $15k of SS benefits if I die first. The ladder is in place until age 78. One question I was asked on bogleheads was what happens @ age 79? Haven't figured that one out yet. Maybe I can assume she will be old and frail and not spend as much.
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Old 08-12-2018, 11:27 AM   #33
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You are correct that the SS number is for both people. My wife has no earnings record, so that is my benefit @ age 70 and her spousal benefit.

The life insurance is there to help cover the pension going down to 55% and losing $15k of SS benefits if I die first. The ladder is in place until age 78. One question I was asked on bogleheads was what happens @ age 79? Haven't figured that one out yet. Maybe I can assume she will be old and frail and not spend as much.
80 is the new 70. i just joined the United Flying Octogenarians. We have male and female members all over the country.. We have 2 cruises booked, one for this year, and one for next April.
I just saw a segment on CBS Sunday Morning featuring Petula Clark, who is touring at the age of 85!
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Old 08-21-2018, 04:40 PM   #34
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Corn18, your plan looks pretty good. I left full time work 2 years ago at age 61 and am pleasantly surprised how it is easier when you plan, so you are off to a good start.

Your plan is Plan A, you need to consider black swan events like a war, or big market swoon or unexpected death. So in other words have a Plan B and Plan C.

I don't know if your SS numbers are guaranteed considering all the talk about it providing fewer benefits to younger folks.

Al
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Old 08-21-2018, 06:00 PM   #35
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Corn18, your plan looks pretty good. I left full time work 2 years ago at age 61 and am pleasantly surprised how it is easier when you plan, so you are off to a good start.

Your plan is Plan A, you need to consider black swan events like a war, or big market swoon or unexpected death. So in other words have a Plan B and Plan C.

I don't know if your SS numbers are guaranteed considering all the talk about it providing fewer benefits to younger folks.

Al
Al,

Based on feedback, I have set up black swan events (25% hit to SS, 40% drop in equities the year of retirement). I also added what if's on income for the next 3 years. And added OMY to my plan, although that is plan D. I have a range of annual income @ age 55. When the time comes, I will have more clarity and can decide if I have enough or not.

$115k = 25% hit to SS, 40% hit to equities the year of retirement, no bonuses and 0% nominal return between now and retirement

$157k = best case: 4% real return between now and retirement, no bear market, no hit to SS, full bonuses

The answer likely lies somewhere in between these two numbers. OMY at my high savings rate really reduces a lot of risk.

There is also a 7 figure inheritance somewhere in the future, but that is not in the plan.
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Old 08-21-2018, 06:52 PM   #36
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I think on the face of it your plan looks good, and from your responses it seems your down with cutting expenses when necessary.

I would suggest a little non-finance planning, what do you plan to do after first year of retirement to keep yourself busy? I’m thinking your 2 children are still at home, what about when they move out and have separate lives? Have a discussion with spouse about what you each see as lifestyle in retirement.
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Old 08-21-2018, 10:43 PM   #37
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I'm not retired yet, but I have a few snap judgements on your budget that follows :

"
BUDGET Monthly Annual
AUTO FUEL 150 1,800.00
AUTO SERVICE 75 900.00
CLOTHES 300 3,600.00
DOGS / CATS 200 2,400.00
FOOD 700 8,400.00
DINING 700 8,400.00
HEALTH / BEAUTY 300 3,600.00
HOUSE MAINT 250 3,000.00
ENTERTAINMENT 200 2,400.00
MEDICAL 500 6,000.00
LUMPY STUFF 365 4,376.00
MISC 750 9,000.00

TOT DISC 4,490 53,876

HOUSE Tax&Ins 767 9,204.00
LIFE INSURANCE 220 2,640.00
CELL PHONE 150 1,800.00
CABLE 141 1,692.00
ELECTRIC / GAS 150 1,795.80
WATER 110 1,320.00
INTERNET 64 762.24
AUTO INS 150 1,800.00

Get rid of cable (add netflix and/or HD OTA), downgrade your cell phone plan. $700 for dining-out per month? Cut that or repurpose some of it toward cooking. $750 for misc? Lumpy stuff $350? Clothes $300?

I think you can shave off $1000 off your monthly budget fairly easily - you'll hardly notice it. Are you in a city - if so, recommend your library for additional entertainment unless inconveniently located. Your taxes are going toward it anyway.
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Old 08-26-2018, 10:09 AM   #38
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Brief comparisons:


I have been tracking our expenses now since 2007, and for just my wife and I (no kids, no pets), I went back and looked at a few of our expenses over time:


Groceries per year average = 8K-9K
Gasoline for 2 cars - per year average = 2K
Dining out - per year average = 1K
Utilities = Gas,Electric,Water,Cable,Internet - per year average = $6K
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Old 08-26-2018, 12:31 PM   #39
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I think your plan looks good. Depending on your cost of living you can easily spend 75k/year. We spend 62/year not counting vacations which are usually a extra 10k. This is for 2 people. We now have the time and energy to go out so we do. During the warmer months locally there is a festival every weekend. We live in a medium cost of living. When I was recently in Kenosha my favorite drink was half of what it cost here.
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