Shoot holes in my plan or give me a sanity check

[frayne]

Posted here a couple of years ago and will offer this update, hopefully for some wise and sage advice from those who have been there and done that.

Currently 53 yrs. old, wife 51yrs. old, both in reasonably good health. Have no debt, two fairly new vehicles, about $200K equity in home, $50K in savings and $700K in 401K and retirment plan. Planning to downsize this year and hoping to bank about $50K in the process. Employed and drawing $100K salary, wife works part time and makes less than $20K. Hobbies are golf, golf, golf, fishing, tennis, cycling, and about anything outdoors. Golf is a passion and so is motorcycling. Planning to bank another $50K before pulling out the stops and retiring at age 55 in two years. If all goes according to plan should have approx. $900K, give or take $50K either way by the time I'm 55. Also hoping for, but not counting on a buy out package which could add anywhere from $75-150K before taxes to my bottom line. Plan to do something part time on my own terms when I do retire. Current investments are well diversified and last year I made about a 28% return.

I believe I'm going down the correct path and have a fairly sound plan. However I don't know what the best investment strategy will be when I do retire as far as income generation. As well as should I be doing anything differently in posturing myself for retirement from an investment standpoint. Currently doing most of my business with Fidelity in the form of mutual funds, in addition to some individual stocks.

Would appreciate any and all advice.

[BigMoneyJim]

Looks doable to me. From your post I expect the biggest trick will be controlling green fee expenses.

How much do you expect to withdraw each year? How little could you get by on? At this point it's all about expenses; if you want a new Harley , Hummer and golf cart each year you may not make it. If what you have will do you for a while you'll probably be fine.

[frayne]

Thanks for the reply BMJ. Looking to withdraw approx. 5% per year. Have a membership at a Fazio designed course which is only about $1500 a year. Actually I still prefer to walk and carry my clubs as opposed to carting. Ride a Honda, more reliable and a helluva alot cheaper than a Harley. Currently have a 2000 Ford Explorer and a 2000 Taurus both with 50K on the clocks. Fiqure I'll trade the Explorer, get the little woman a decent car and I'll inherit the Taurus. Pretty much have all my toys bought and payed for. Live pretty frugle for the most part with a few golf trips during the winter months to keep me sane.

[charlie]

frayne,

Have you tried FIREcalc yet? This is an
excellent tool to use for a sanity check
on your withdrawal rate. Check out
Bernstein"s "4 Pillars of Investing" if
you have not done so already. Most of
the posters on this forum are avid fans
of Bernstein and John Bogle of Vanguard
fame.

Good Luck,

Charlie

[BigMoneyJim]

Thanks for the reply BMJ. Looking to withdraw approx. 5% per year.

5% would concern me a bit. I don't know what your investment mix is, but I ran FIREcalc (link above) with 900,000 starting portfolio, 45k/year withdrawal and all other settings untouched (30 year span, 75% stocks, etc.) and those numbers would have survived 88.6% of historical 30-year periods.

Does that mean anything? Not necessarily, and there are arguments for and against 5% being safe today or 2 years from now.

The people I pay most attention to seem to feel they can make it on 2%, prefer 3-3.5% and would be plenty happy with 4% and adjust spending based on portfolio performance. But each situation is different. If you read around here for a while you'll pick up a lot of general and specific examples and get more confidence in what you feel you can do with your assets.

Other than that, it sounds to me like you have the frugal-minded ER approach which from my point of view appears to be the most successful.