Join Early Retirement Today
Reply
 
Thread Tools Display Modes
Semi-retire: Without using RE $$$$
Old 08-28-2006, 08:52 AM   #1
Dryer sheet wannabe
 
Join Date: Aug 2006
Posts: 16
Semi-retire: Without using RE $$$$

It took a lot of self convincing to post on this site, even after months of lurking, not because I'm self-conscious of posting, but in doing so, I realized I was taking the first committed step to FIRE. It remains a daunting proposition.

Here is what I hope is not a redundant question: Being 46 and having about $700k in retirement, if I continue to work on a limited basis, bringing in about
40-45K a year and living on that income without using the $700k until I reach
59 1/2 (13 years), but not adding to savings, could I retire on $40K/year (inflation adjusted) in 13 years?

I am currently invested 30% bonds, 55% mutual funds, 15% individual stocks.
bcurtis is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Re: Semi-retire: Without using RE $$$$
Old 08-28-2006, 09:14 AM   #2
Recycles dryer sheets
 
Join Date: Nov 2004
Posts: 117
Re: Semi-retire: Without using RE $$$$

You might not have to wait 13 years. My back-of-the-envelope says you might be able to retire fully after 5 years of scaled-back working. You have no control over what returns you might get over the next 5-13 years, so you'll have to be flexible. If you get good returns, you can retire earlier, otherwise you have to wait.

I'm considering the same approach. Save up, scale back and wait. It just seems easier to coast than trying to run full-steam across the finish line a few months earlier.
slepyhed is offline   Reply With Quote
Re: Semi-retire: Without using RE $$$$
Old 08-28-2006, 09:25 AM   #3
Moderator Emeritus
Rich_by_the_Bay's Avatar
 
Join Date: Feb 2006
Location: San Francisco
Posts: 8,827
Re: Semi-retire: Without using RE $$$$

Quote:
Originally Posted by Curt
Here is what I hope is not a redundant question: Being 46 and having about $700k in retirement, if I continue to work on a limited basis, bringing in about 40-45K a year and living on that income without using the $700k until I reach
59 1/2 (13 years), but not adding to savings, could I retire on $40K/year (inflation adjusted) in 13 years?
I don't think this is unusual, and I plan to do the same but only for about 5 years (ages 60-65). I'll probably dip into nonqualified funds a bit here and there to fill in the gaps, i.e. so I don't have to work too hard to earn my keep. Clyatt's book discussed this option quite a bit.

What do plan to do about health insurance?
__________________
Rich
San Francisco Area
ESR'd March 2010. FIRE'd January 2011.

As if you didn't know..If the above message contains medical content, it's NOT intended as advice, and may not be accurate, applicable or sufficient. Don't rely on it for any purpose. Consult your own doctor for all medical advice.
Rich_by_the_Bay is offline   Reply With Quote
Re: Semi-retire: Without using RE $$$$
Old 08-28-2006, 09:28 AM   #4
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas: No Country for Old Men
Posts: 50,003
Re: Semi-retire: Without using RE $$$$

Quote:
Originally Posted by Curt
Here is what I hope is not a redundant question: Being 46 and having about $700k in retirement, if I continue to work on a limited basis, bringing in about
40-45K a year and living on that income without using the $700k until I reach
59 1/2 (13 years), but not adding to savings, could I retire on $40K/year (inflation adjusted) in 13 years?

I am currently invested 30% bonds, 55% mutual funds, 15% individual stocks.
Curt, welcome to the forum.

If you haven't already done so, I would suggest running your scenario through FIRECalc. Pretend you are retiring now but withdrawing zero dollars for the first 13 years of retirement.

Here's how I think it should work: Using FIRECalc Advanced, put in 0 initial spending, $40,000 annual spending beginning in 13 years (it will adjust for inflation). Be sure to include SS payments at age 62 or whenever you plan on taking it (use today’s dollars). Complete the entry of your information on the remaining pages and see what success rate you get.

If I'm off base on this, I have every confidence others here will take me to task.

__________________
Numbers is hard
REWahoo is offline   Reply With Quote
Re: Semi-retire: Without using RE $$$$
Old 08-28-2006, 09:34 AM   #5
Moderator Emeritus
Rich_by_the_Bay's Avatar
 
Join Date: Feb 2006
Location: San Francisco
Posts: 8,827
Re: Semi-retire: Without using RE $$$$

That sounds like it should work, or else stick with 40k expense, and then DECREASE withdrawals by 40k starting now, and INCREASE withdrawals by the same amount whenever you turn 59 1/2 yrs of age, inflation adjusted.
__________________
Rich
San Francisco Area
ESR'd March 2010. FIRE'd January 2011.

As if you didn't know..If the above message contains medical content, it's NOT intended as advice, and may not be accurate, applicable or sufficient. Don't rely on it for any purpose. Consult your own doctor for all medical advice.
Rich_by_the_Bay is offline   Reply With Quote
Re: Semi-retire: Without using RE $$$$
Old 08-28-2006, 09:55 AM   #6
Dryer sheet wannabe
 
Join Date: Aug 2006
Posts: 16
Re: Semi-retire: Without using RE $$$$

Quote:
Originally Posted by Rich_in_Tampa
I don't think this is unusual, and I plan to do the same but only for about 5 years (ages 60-65). I'll probably dip into nonqualified funds a bit here and there to fill in the gaps, i.e. so I don't have to work too hard to earn my keep. Clyatt's book discussed this option quite a bit.

What do plan to do about health insurance?
What is the title of Clyatt's book? More informatioin is always beneficial.

I'm still pondering the Health Insurance issue.
bcurtis is offline   Reply With Quote
Re: Semi-retire: Without using RE $$$$
Old 08-28-2006, 09:59 AM   #7
Moderator Emeritus
Rich_by_the_Bay's Avatar
 
Join Date: Feb 2006
Location: San Francisco
Posts: 8,827
Re: Semi-retire: Without using RE $$$$

Bob Clyatt's book is here.
__________________
Rich
San Francisco Area
ESR'd March 2010. FIRE'd January 2011.

As if you didn't know..If the above message contains medical content, it's NOT intended as advice, and may not be accurate, applicable or sufficient. Don't rely on it for any purpose. Consult your own doctor for all medical advice.
Rich_by_the_Bay is offline   Reply With Quote
Re: Semi-retire: Without using RE $$$$
Old 08-28-2006, 10:01 AM   #8
Moderator Emeritus
Nords's Avatar
 
Join Date: Dec 2002
Location: Oahu
Posts: 26,856
Re: Semi-retire: Without using RE $$$$

Quote:
Originally Posted by Curt
What is the title of Clyatt's book? More informatioin is always beneficial.
Whoop, yeah, what Rich said a few minutes faster than me.

"Work Less, Live More". *Click the link here:"Buy ESRBob's ER book", the similar link at the bottom of your screen, or look for it at a local library.

Bob's book will also help you work through the health insurance issue, and you can search this board's old posts on the subject.
__________________
*

Co-author (with my daughter) of “Raising Your Money-Savvy Family For Next Generation Financial Independence.”
Author of the book written on E-R.org: "The Military Guide to Financial Independence and Retirement."

I don't spend much time here— please send a PM.
Nords is offline   Reply With Quote
Re: Semi-retire: Without using RE $$$$
Old 08-28-2006, 11:05 AM   #9
Thinks s/he gets paid by the post
Sheryl's Avatar
 
Join Date: Apr 2004
Posts: 1,463
Re: Semi-retire: Without using RE $$$$

What Nords said.

If you use the link at the bottom of the forum to get to the Amazon purchase I believe that a small kick-back well-deserved donation goes to help run the forum.
Sheryl is offline   Reply With Quote
Re: Semi-retire: Without using RE $$$$
Old 08-28-2006, 11:08 AM   #10
Thinks s/he gets paid by the post
 
Join Date: Aug 2005
Posts: 1,375
Re: Semi-retire: Without using RE $$$$

Curt, what you want to do is similar to what my husband and I are doing. Having tucked away a goodly sum but not feeling ready to live off of it just yet, we left Silicon Valley 4 years ago and started earning ~1/4 of our peak total income...in my case by telecommuting part time for my former employer, and in DH's by taking a lower-paid, lower-stress job with lots of vacation (college instructor). As DH's paychecks increased, I cut back my hours until I finally retired complelely a year ago.

DH is on the fence about retiring soon--but if he works another 3 years (to age 60) we get lifetime health benefits and a tiny pension. I'm also a little nervous about the economy and what that might mean for our investments and cost of living. But I was even more nervous in 2002 when we simplified our lives, and we've done well so far!

REWahoo, I not only think you're on base with your FIRECalc advice, I think you hit a homerun

EDIT That should be 1/4 of our former peak income, not 1/3.
__________________
You can't always get what you want, but if you try sometimes, you might find you get what you need.
astromeria is offline   Reply With Quote
Re: Semi-retire: Without using RE $$$$
Old 08-28-2006, 12:55 PM   #11
Dryer sheet wannabe
 
Join Date: Aug 2006
Posts: 16
Re: Semi-retire: Without using RE $$$$

Quote:
Originally Posted by REWahoo!
Curt, welcome to the forum.

If you haven't already done so, I would suggest running your scenario through FIRECalc. Pretend you are retiring now but withdrawing zero dollars for the first 13 years of retirement.

Here's how I think it should work: Using FIRECalc Advanced, put in 0 initial spending, $40,000 annual spending beginning in 13 years (it will adjust for inflation). Be sure to include SS payments at age 62 or whenever you plan on taking it (use today’s dollars). Complete the entry of your information on the remaining pages and see what success rate you get.

If I'm off base on this, I have every confidence others here will take me to task.

I tried this with the advanced FIRE calc. and based on my numbers, I have a 94.7% chance of succeeding if I leave my 700k alone until 2019 and then take out $71,000k a year.

My outlook has improved immensely.
bcurtis is offline   Reply With Quote
Re: Semi-retire: Without using RE $$$$
Old 08-28-2006, 12:59 PM   #12
Moderator Emeritus
Rich_by_the_Bay's Avatar
 
Join Date: Feb 2006
Location: San Francisco
Posts: 8,827
Re: Semi-retire: Without using RE $$$$

Curt,

Sound like you're in good shape with the current plan. Time is on your side.

Not to state the obvious, but two common planning mistakes in this scenario include underestimating health insurance costs and increases, and forgetting that these withdrawal amounts do not take taxes into account.

Other than that, good luck with your upcoming semi-retirement.
__________________
Rich
San Francisco Area
ESR'd March 2010. FIRE'd January 2011.

As if you didn't know..If the above message contains medical content, it's NOT intended as advice, and may not be accurate, applicable or sufficient. Don't rely on it for any purpose. Consult your own doctor for all medical advice.
Rich_by_the_Bay is offline   Reply With Quote
Re: Semi-retire: Without using RE $$$$
Old 08-28-2006, 01:21 PM   #13
Dryer sheet wannabe
 
Join Date: Aug 2006
Posts: 16
Re: Semi-retire: Without using RE $$$$

Rich,

Thanks, I'll be book shopping later today! (Clyatt)
bcurtis is offline   Reply With Quote
Re: Semi-retire: Without using RE $$$$
Old 08-28-2006, 01:45 PM   #14
Recycles dryer sheets
 
Join Date: Apr 2006
Posts: 190
Re: Semi-retire: Without using RE $$$$

Added tidbit. You're going to get some magnitude of Soc. Security, like the vast majority of Americans, but don't just toss in numbers like what you hear your parents get. If you ramp down your income in your 40's, or stop working altogether in your 50's, the SS pension will be reduced.

Hit ssa.gov to get an estimate.
modlair is offline   Reply With Quote
Re: Semi-retire: Without using RE $$$$
Old 08-28-2006, 02:01 PM   #15
Dryer sheet wannabe
 
Join Date: Aug 2006
Posts: 16
Re: Semi-retire: Without using RE $$$$

Quote:
Originally Posted by rodmail
Added tidbit. You're going to get some magnitude of Soc. Security, like the vast majority of Americans, but don't just toss in numbers like what you hear your parents get. If you ramp down your income in your 40's, or stop working altogether in your 50's, the SS pension will be reduced.

Hit ssa.gov to get an estimate.
I actually did my calculations without factoring in any SS. I'm not confident enough in the long term viability of the current system to use it in any extended planning.
bcurtis is offline   Reply With Quote
Re: Semi-retire: Without using RE $$$$
Old 08-28-2006, 03:06 PM   #16
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
donheff's Avatar
 
Join Date: Feb 2006
Location: Washington, DC
Posts: 11,317
Re: Semi-retire: Without using RE $$$$

Quote:
Originally Posted by Curt
I actually did my calculations without factoring in any SS. I'm not confident enough in the long term viability of the current system to use it in any extended planning.
That is certainly a safe approach, but SS is too fundamental to the national well being to just disappear. We could conceivably scale it back to 70-80% of current benefits, or the like, but we won't just kill it cold. Remember, it is ultimately us that make the changes.
__________________
Idleness is fatal only to the mediocre -- Albert Camus
donheff is offline   Reply With Quote
Re: Semi-retire: Without using RE $$$$
Old 08-28-2006, 04:21 PM   #17
Recycles dryer sheets
 
Join Date: Jun 2006
Posts: 473
Re: Semi-retire: Without using RE $$$$

Quote:
Originally Posted by donheff
That is certainly a safe approach, but SS is too fundamental to the national well being to just disappear.* We could conceivably scale it back to 70-80% of current benefits, or the like, but we won't just kill it cold.* Remember, it is ultimately us that make the changes.
Well, it is certainly true that if there is strong popular support for the current system and if the balance sheet is not too far out of whack, then the system will probably be kept afloat, give or take some tax increases, benefit reductions, retirement age alterations, etc. 70%+ sounds like a reasonable estimate given what the annual Trustees report says.

However, it's hard to predict the electorate's preferences that far into the future. For example, what if means testing, already partially implemented under the current system, becomes more widespread? Marginal tax rates on SS income for working middle class beneficiaries are already some of the highest within the current system and there is little popular outcry, so further adjustments along the same lines are conceivable.
Scrooge is offline   Reply With Quote
Re: Semi-retire: Without using RE $$$$
Old 08-28-2006, 05:01 PM   #18
Thinks s/he gets paid by the post
MasterBlaster's Avatar
 
Join Date: Jun 2005
Posts: 4,391
Re: Semi-retire: Without using RE $$$$

Quote:
However, it's hard to predict the electorate's preferences that far into the future. For example, what if means testing, already partially implemented under the current system, becomes more widespread? Marginal tax rates on SS income for working middle class beneficiaries are already some of the highest within the current system and there is little popular outcry, so further adjustments along the same lines are conceivable.
- Just remember who votes. The older and somewhat well to do. I would be surprised if means testing alone is the solution implemented for SS reform. But well just have to wait and see how this gets implemented.
MasterBlaster is offline   Reply With Quote
Re: Semi-retire: Without using RE $$$$
Old 08-29-2006, 12:58 PM   #19
Dryer sheet wannabe
 
Join Date: Aug 2006
Posts: 16
Re: Semi-retire: Without using RE $$$$

Just to make certain I get at least a bit of the SS pie, I'm aiming to receive any benefits I can as sson as I qualify. It might not make the most financial sense, if the system survives, but at least I'll get some return on those years of contributing.
bcurtis is offline   Reply With Quote
Re: Semi-retire: Without using RE $$$$
Old 08-29-2006, 01:43 PM   #20
Recycles dryer sheets
 
Join Date: Jun 2002
Posts: 376
Re: Semi-retire: Without using RE $$$$

Curt, I'm 47. I figure there is little chance that the next administration will have the guts to take on SS in a meaningful way in a first term. I think it is somewhat more likely that a 2nd term administration, possibly starting when you and I are 52 & 53 might have the stones to do something significant. My crystal ball says they'd be more inclined to give the AARP members a pretty much of a pass on whatever strog medicine will be required.

So, I think figuring on receiving 0% of current SSA estimates is unrealistic. I'm figuring on 75% and I think that's probably a bit too conservative, but better safe than sorry.

Cb
Cb is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
500 search phrases for 2006 dory36 Other topics 2 01-16-2007 07:00 AM
I thought I'd post a Picture of my Wife naked..... TromboneAl Life after FIRE 13 10-19-2005 09:14 AM
How people find us... asian carp?? dory36 Forum Admin 4 05-27-2005 12:07 PM

» Quick Links

 
All times are GMT -6. The time now is 08:28 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.