Pretty close, critique/input/advice welcomed!

[like2]

My goal has always been to to be able to retire at 55. I hit this mark in September and I feel confident in being able to go. DW retired in July and I am more than ready to join her. I must say this forum and the folks here have provided an excellent education in regards to the DIY approach to handling our retirement funds. Initially I was convinced that I would need an FA and a high percentage of my friends I work with have gone that route. At some point i realized I have been managing my 401k and savings and have done okay to this point. So here is our plan, i won't lay out our expenses in detail but with what we will have coming in everything is very easily covered and we have sufficient savings for any sizable expenses that may arise. Also our medical coverage is through CalPers and is very reasonable. I am planning on pulling the pin on March 29th, 2019 Here is our plan-

Age 55-60

Wife’s pension- 1600 month

My pension- 1900 month (No COLA for either)

Interest from CDs-800 month=

4300 month/51600 yearly

Savings to supplement as/if needed

401K into Vanguard IRA- 1.7m- 60/20/20 total market/international market/total bond

Age 60-?

Begin draw down of 401K if needed or to reduce tax liability (need to educate myself here)

SS-62-67 when needed

It actually seems almost too simple now that the time is here and that is one of the reasons i would welcome any feedback!! Thank you.

 

[COcheesehead]

Have you plugged this data into Firecalc?
What are your total expenses.

 

[like2]

I have! Monthly expenses total $3800 and this includes our property taxes (pay them biannually) and vehicle registrations averaged in.

 

[SecondCor521]

The simplest analysis is that 4% is usually considered a safe withdrawal rate.

Your $1.7M will throw off $68,000 per year. You can add that to the $51,600 I guess, so if your lifestyle is less than $119,600 then you're in the ballpark.

Since that appears to exclude SS, you could calculate the NPV of your SS and include 4% of that if you wanted to.

Off the top of my head, some of the common bugaboos:

1. Health care inflation.

2. Large expenses (car replacement, roof replacement, dental expenses like root canals, kids college / weddings / starting in life)

3. Are you sure of your monthly expenses? Have you tracked them for a few years?

ETA: Looks like you could spend $10K per month and be safe. Since your expenses are $3800 per month it looks to me like you're in the tall clover. Congratulations.

 

[COcheesehead]

I have! Monthly expenses total $3800 and this includes our property taxes (pay them biannually) and vehicle registrations averaged in.

If your expenses are $3800/month and you are not overlooking something, you’re golden.
What did Firecalc tell you?
What about fun, travel? Seems like you have room for that.

 

[like2]

Thanks for your input! Our lifestyle is pretty simple, home is paid for, kids (2) are done with school and doing well. I have planned on using a 3% withdrawal rate. For the potential bugaboos-



1. Health care inflation- Definitely a concern! Not sure how this an be mitigated but open to ideas!

2. Large expenses (car replacement, roof replacement, dental expenses like root canals, kids college / weddings / starting in life)- Have been taking care of some of these the last few years, roof was replaced 2 years ago, I do worry about our A/C unit it is 30 years old but works great. Good stuff to consider for sure.

3. Are you sure of your monthly expenses? Have you tracked them for a few years? Yes, we began 5 years ago. Following advice form this forum!

 

[like2]

COcheeshead-

Firecalc gives us 100% for 35 years. As far as fun and travel, we have some cushion in our monthly income along with our savings. I do feel though that this may be one area we cutback on a bit at least until we are 60. I say this because we do take some nice trips currently but once I leave work our income does drop quite a bit. This is something we have discussed and feel the trade off is well worth it.

 

[COcheesehead]

COcheeshead-

Firecalc gives us 100% for 35 years. As far as fun and travel, we have some cushion in our monthly income along with our savings. I do feel though that this may be one area we cutback on a bit at least until we are 60. I say this because we do take some nice trips currently but once I leave work our income does drop quite a bit. This is something we have discussed and feel the trade off is well worth it.

I understand the need to be conservative. Have fun, good luck.

 

[like2]

Thank you, very much appreciate your feedback. I am pretty excited and hope I can make it until March....

 

[Ronstar]

I'd say you're good to go. $3800 monthly expenses on 9-10k a month income. I would try some Roth conversions on that IRA.

And my advice on the trips - it will be better to do them sooner rather than plan to do them later.

 

[IMATERP]

I'd say you're good to go. $3800 monthly expenses on 9-10k a month income. I would try some Roth conversions on that IRA.

And my advice on the trips - it will be better to do them sooner rather than plan to do them later.

+1. I am 100% in agreement with Ronstar. My wife and I are in a similar situation - with about 75% of the pension and IRA that you have. Our fixed spending is $2,500 a month (with ease.)

We take 2/3 trips per year and I work 10-15 hours a week which covers my personal variable costs. Wife works full time but will be reassessing possible employment switch in January.

We both will receive State provided healthcare in 2 years. Simply, that is what we are waiting for with respect to my wife.

2019 and 2020 will be large 401 > Roth conversions for us.

I

 

[Dtail]

Agree you should look into Roth conversions over time to reduce the RMD effect later on.
What are your plans for health coverage? Have you looked into ACA plans?

 

[mrfeh]

I have! Monthly expenses total $3800 and this includes our property taxes (pay them biannually) and vehicle registrations averaged in.

Just make sure you have a firm grasp on your expenses. Have you included occasional, large expenses, like furnace/AC replacement? Car purchases?

 

[Scuba]

Looks like you’re financially ready and sounds like you’re emotionally ready too. Go for it! I agree with others re taking trips sooner vs later. Traveling gets harder as you age.

 

[like2]

Thanks for all of the input, i really appreciate it! I have really gleaned a lot of great information on this forum and feel very confident about our retirement. Some of the things mentioned in regards to large expense, we have considered that and have taken care of some things over the last couple of years. Our current vehicles are in good shape and I maintain them regularly the biggest thing hanging over our heads is our A/C unit, it is 30 years old but still works like a son of a gun! Maybe another year or two with it. If not we would be alright replacing it. As far as travel, i appreciate the idea of getting more of it done in our early retirement years, I see my Dad who has always been an avid traveler starting to lose interest, he is in his late 70s. Now I need to start focusing on more details like which funds to choose, and the long term prep as mentioned before about rolling some of the income into a Roth once we reach 60. Again, I cannot overstate how much good this forum as done in helping us prepare for this next chapter!!

 

[like2]

Also i will be giving my boss the good news tomorrow at our quarterly 1 on 1 meeting!

 

[Cassius King]

Congrats like2!

 

[like2]

Thank you!