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Please review my plan (split from another thread)
Old 11-13-2014, 02:10 PM   #1
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Please review my plan (split from another thread)

Here's our situation:

Age: 60 (me), 62 (wife)

Assets (not including house): 2.4M
House (conservative estimate): 350K
Social Security: I plan on delaying to 70 (high earner relatively speaking). My wife (62) could collect $1,000/month now, $1,300 at age 66.
Debt: Still owe $40K on the house.

One more year of work would earn us $170K max combined. I (the high earner) do not expect a salary increase or much bonus since my company sucks rewarding people.

Our expenses are $72K/year (essential), $96K max discretionary. we are not big spenders, look for every opportunity to save money, use coupons/promos, etc.

On the fence so far as retiring now, or trying to make one more year unless I get RIF'ed. Thoughts?
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Old 11-13-2014, 02:17 PM   #2
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Quote:
Originally Posted by omysteve View Post
Here's our situation:

Age: 60 (me), 62 (wife)

Assets (not including house): 2.4M
House (conservative estimate): 350K
Social Security: I plan on delaying to 70 (high earner relatively speaking). My wife (62) could collect $1,000/month now, $1,300 at age 66.
Debt: Still owe $40K on the house.

One more year of work would earn us $170K max combined. I (the high earner) do not expect a salary increase or much bonus since my company sucks rewarding people.

Our expenses are $72K/year (essential), $96K max discretionary. we are not big spenders, look for every opportunity to save money, use coupons/promos, etc.

On the fence so far as retiring now, or trying to make one more year unless I get RIF'ed. Thoughts?
You should start a new thread. If you don't, you'll get less specific advice from fewer people. Also, you won't be sure if comments are directed to you or the original poster.
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Old 11-14-2014, 10:12 AM   #3
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This post was split off from a thread by robnplunder on the Hi I Am board.
One final check with fine folks here
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Old 11-14-2014, 10:23 AM   #4
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A few questions for you

Does your spouse plan to keep working?

Do you plan to payoff the house? Do you have any other expenses that could change? (kids or parents)

On the surface I would think you are in better shape than the thread that you previously posted in, you are 7 years older than Rob, have a bit more money saved and have a slightly lower overall budget it seems
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Old 11-14-2014, 10:33 AM   #5
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It seems that you are in fine shape to FIRE now. One more year won't change your finances much, so from financial POV why would you wait? If you can get medical or a pension by waiting, I would do one more.

Other things to consider, are you ready from other perspectives? Do you want to sell your home and move when you ret? Do you want to start a part time gig? Is there a reason along these lines to wait?

Do you need time to adjust socially? It could be time is needed to get things in place or could be you need to spend a year on your FIRE budget to be comfortable or confident?

If you have considered the other than $$ reasons, and no reason to delay, then I would say when ever you want, from money perspective, you should be able to draw $80K between now and 70, then perhaps a little less once you draw SS, which would bring down your WD rate from 4% to 2 1/2% or so. Will your house payment drop your $72K by much? Either way, I think your covered.
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Old 11-14-2014, 10:48 AM   #6
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Looks good to me. What does FIRECalc say? I don't think any retirement calculator is the "be all end all" for deciding whether or not to retire, but sometimes it's a good double check of what one already might suspect. Given my own FIRECalc results, I strongly suspect it gives you 100% probability of success.

If so, then I would suggest doing it!!! Retirement is better than I ever dreamed it would be.
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Old 11-14-2014, 10:55 AM   #7
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Nice! I pronounce you good to go.
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Old 11-14-2014, 11:06 AM   #8
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Nice! I pronounce you good to go.
I agree. I would recommend you run FireCalc as suggested earlier.
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Old 11-14-2014, 01:26 PM   #9
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If it were me, I would pay off the mortgage to be debt free in retirement. Otherwise you look OK.
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Old 11-14-2014, 01:49 PM   #10
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omysteve,

Looks good. Feel free to change your user name to nmysteve, firedsteve, etc.
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Old 11-14-2014, 02:04 PM   #11
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Repeating myself a bit, but just to be sure:

Working one more year for financial reasons doesn't make sense. You have plenty. Wife SS alone puts you under 3.5% withdrawal rate right now, that's with the 'max discretionary' budget.

Do read up on asset allocation and asset management.

And think about splurging a bit extra and/or who you'll leave your estate too in the future.
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Old 11-15-2014, 12:38 AM   #12
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Yep, you seem fine, as long as you realize you will be paying for medical which maybe you currently get via work. Perhaps that is in your (essentials) spending already?
I get 4% withdrawal of 2.4MM as 96K/yr. Like others said run fireCalc to satisfy yourself.
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Old 11-15-2014, 06:25 AM   #13
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What are you waiting for........... Christmas?

Your situation is very similar to ours except we are a bit younger (59) and have been enjoying retirement for 3 years.

For me, while I enjoyed my work it got to a point where we had enough and working more was just improving our kid's inheritance so I decided to quit and enjoy life more.
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Old 11-15-2014, 08:47 AM   #14
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Yep, you seem fine, as long as you realize you will be paying for medical which maybe you currently get via work. Perhaps that is in your (essentials) spending already?
I get 4% withdrawal of 2.4MM as 96K/yr. Like others said run fireCalc to satisfy yourself.
Hi Sunset...yes for my job we get group medical/dental benefits and wellness program credit perks. Premiums are pre-tax deducted from paycheck. Those costs would increase significantly with Cobra or ACA premiums, but our daughter could probably switch to ACA and get a high subsidy since her earnings are low enough.

For us the biggest unknowns are these:
1. What will life be like after retirement - will we have enough things to do, or get bored?
2. Will we have too much fun in retirement (travel, etc) and blow our expenses out of the water?
3. Will we be able to cover for unforeseen emergency expenses in the family (daughter, living parents in their late 80s without LTC)?
4. Will we be able to leave some inheritance to our daughter? I don't expect her to generate any substancial wealth in her lifetime on her own.
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Old 11-15-2014, 09:53 AM   #15
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Do your 72k/96k spending numbers include all Federal and State income taxes?

Is your 2.4M mostly tax deferred money?

Is your 96k spending based on what you are actually spending now?

-gauss
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Old 11-15-2014, 10:11 AM   #16
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Do your 72k/96k spending numbers include all Federal and State income taxes?

Is your 2.4M mostly tax deferred money?

Is your 96k spending based on what you are actually spending now?

-gauss
The 72k/96k is net amount we need annually after taxes for (1) essential expenses (72k) and (2) essential + discretionary expenses (96k), respectively.

The 2.4M is broken down this way:
1.1M taxable account
1.1M tax deferred accounts (401K, IRAs)
200K Roth IRA

I estimate we are spending now 84-85K a year.

Our total debt is 40K (remaining mortgage), cars are paid off.
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Old 11-15-2014, 10:29 AM   #17
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Originally Posted by omysteve View Post
Hi Sunset...yes for my job we get group medical/dental benefits and wellness program credit perks. Premiums are pre-tax deducted from paycheck. Those costs would increase significantly with Cobra or ACA premiums, but our daughter could probably switch to ACA and get a high subsidy since her earnings are low enough.

For us the biggest unknowns are these:
1. What will life be like after retirement - will we have enough things to do, or get bored?
2. Will we have too much fun in retirement (travel, etc) and blow our expenses out of the water?
3. Will we be able to cover for unforeseen emergency expenses in the family (daughter, living parents in their late 80s without LTC)?
4. Will we be able to leave some inheritance to our daughter? I don't expect her to generate any substancial wealth in her lifetime on her own.
It's pretty difficult for any of us to know the answers to these questions before retiring, but here are some comments.

1. I think that you will have no issue with boredom after retirement if you can entertain yourself now. That is a learned skill.

2. You can just wait a bit to travel if/when your travel spending starts to get ahead of your income, just as you probably do now while working.

3. Unforeseen emergency expenses are, by nature, unforeseen, of course. So one never knows, but you seem to be in a pretty good financial position overall.

4. I don't see why you wouldn't be able to leave something for your daughter but I recommend that you model that in FIRECalc too, as a double check on your computations.
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Please review my plan (split from another thread)
Old 11-16-2014, 08:58 AM   #18
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Please review my plan (split from another thread)

I'm conservative in nature, but it looks like you're in the retirement range to me.

A couple of conservative thought lol:

Either pay off the mortgage, or sell the house, downsize, and put gains in a taxable account to start withdrawing from.

Look at spending and see if there are places you can cut down waste. Only you can differentiate between waste and what you must have. But $96k annual expenses is right on that 4% cusp, and would make me slightly nervous. SS will make a significant difference, but as for leaving a significant inheritance? We withdraw about 2% and FireCalc suggests our portfolio MAY increase by a factor of 2 or 3, on average. 3.75% appears to be the 100% success rate point.

Social security: I know a lot of people automatically suggest holding off on withdrawals, but it's kind of like buying an insurance policy. How long do you personally expect your life span to be? I read, IIRC, it takes about six years to catch up if you hold off until you're 70. At age 76, you'll have withdrawn the same amount as you would have had you been withdrawing at a lower rate since 62. So after 76, you're ahead of the game. If you die at 72 ... So factor in your personal health situation and family history before deciding for sure.

Good luck, and welcome to the group.



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Old 11-16-2014, 09:31 AM   #19
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If you love your job OMY seems fine, but if you don't, what are you waiting for?
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