Things are looking good! (I think)

[rdjrn]

I'm 53 with almost 30 years with the same company (engineer). I just talked to my financial advisor last week and went over all my assets, liabilities, insurance, retirement needs, etc. She's telling me that based on a conservative allocation, and including SS and my Army Reserve Retirement at age 60, I can draw a monthly check of $5800 (after taxes), and that my money should last until my wife turns 88 (she's 12 years younger than me). This figure increases 4.5% annually to account for inflation. This is about $600 a month more take home money than I currently make working. At 55 years of age I get company insurance until medicare kicks in, and at 60 I also will get Tricare (military).

It looks like a no-brainer that I can hang it up at age 55 doesn't it? (Or am I missing something?)

Please feel free to review and advise.

 

[REWahoo]

Sounds very encouraging but without more information we aren't going to be able to give you any good feedback. Specifically, what will be your source of income in addition to SS and your military pension? How will your expense needs change once you retire? (Knowing your anticipated expenses in retirement is a more accurate measure of your ability to retire than income replacement.) What method did your advisor use to tell you you could draw $600 per month more than you now make?

Like almost every one here who has retired, I wasn't comfortable with only one source of information telling me I was OK financially to pull the plug. You are wise to seek other sources to confirm what your advisor is telling you.

One thing I would definitely do is plug all your numbers into FIRECalc and see if the results are similar to what you've been told.

 

[rdjrn]

Lump sum company pension worth $475,000, plus a company sponsored profit sharing plan that is currently worth $525,000. Also I get a monthly VA disability pension of $1300 (tax free).

I've figured my expense needs based on what we currently spend at it comes to $4300/Month. This amount includes a $550 monthly mortgate payment which will be payed off in about 5 years.

I have ran the numbers through FireCalc many times using what I consider to be worse case scenario's, and the results appear to pretty well match what my advisor is telling me.

 

[REWahoo]

What day do you turn 55 and have you reserved a room for the party yet?

 

[rdjrn]

February 10th, 2012, and you're invited !!

 

[IndependentlyPoor]

You need one of these

 

[rdjrn]

I like it!

 

[Purron]

This amount includes a $550 monthly mortgate payment which will be payed off in about 5 years.

I dunno - you're strapped with that huge mortgage payment Seriously though, it looks like you have all the major bases covered, including health insurance which is a biggie for many folks. Suzie Orman would be proud of you. My only question is what do you want to do when you retire?

 

[LOL!]

Did your financial advisor tell you that if you fire her that you could withdraw $7000 a month (after taxes)?

 

[donheff]

Set the date! Congratulations.

 

[cardude]

If I add up the lump sum pension and the profit sharing plan that comes to $1M. 4% of that is 40K, and knocking about 10% off for tax is 36K or 3K per month. Add in your $1300 VA disibility and you get to your base expense level of $4300 per month.

Does the other $1400 (to get to the $5800 monthly your FA came up with) come from SS and the Army Reserve retirement? If so, that means you have to live on $4300 until you hit 60 or 62 for SS?

I'm just trying to figure out how your FA got to her number..............

And I'm just curious, but how does your FA charge? A fee based on the money she manages or just a flat hourly fee?

 

[rdjrn]

Eliminate the stress of high intensity, rushed, year-long projects.
NO MORE MEETINGS!
Hunting, fishing, tend to my huge vegatable garden
Take care of 60 acres (brush-hogging, trimming trees, etc.)
Play my guitar, sit under the huge oak tree and smoke my pipe (tobacco only)!
Take an occasional nap.
Spend quality time in my hammock.
Etc., etc,. etc,............

 

[rdjrn]

Cardude,... she factored in $17000/year of SS at 62, plus an Army Reserve Retirement of about $1000 per month starting at age 60. Taking a higher percentage draw at 55, a reduced percentage starting at age 60, and a further reduced percentage at age 62.

 

[FinanceDude]

Did your financial advisor tell you that if you fire her that you could withdraw $7000 a month (after taxes)?

Did you ever think of getting on the comedy circuit?

 

[rdjrn]

I actually had the mortgage paid off several years ago, but then I married a woman with kids and had to add-on!
Of course it also helps that I live in Arkansas where housing is relatively cheap.

 

[Alan]

February 10th, 2012, and you're invited !!

Hey - that's my birthday (I'll be 57)

Congratulations on your news, it sounds like you are all set to go.

 

[rdjrn]

Now things are not looking so good (stock market!!!)

 

[cardude]

Is your AA mostly equities in your pension and profit sharing plan?

 

[REWahoo]

Now things are not looking so good (stock market!!!)

Depends on your point of view. For some it is a buying opportunity, or at least an indication one may be on the way. For others, those who are comfortable with their asset allocation and are focused on the long term, it is nothing more than an interesting statistic.

Hold on and enjoy the ride!

 

[rdjrn]

27% in Large Growth Stocks
27% in Large Cap Value Stocks
36% in Intermediate Term Bonds
10% Cash Equivalent

 

[LOL!]

If your asset allocation is just large growth stocks and large value stocks, then you are missing out on a whole lot of mid- and small-cap stocks. You did not mention the amount of foreign stocks. It seems like a couple of quick reads are in order:

The Bogleheads' Guide to Investing, Larimore et al.
The Only Guide to a Winning Investment Strategy You Will Ever Need, Larry Swedroe

These books have no fluff and are straight to the point. They also have some proposed asset allocations. Get the books from your library.