"Threshold years" in ER planning

[Alan]

Quote:

Originally Posted by obgyn65 Yes, in future dollars. I will pay NIC Type 3 when I FIRE to make sure I reach 35 years of contributions.

That makes sense, since you are looking 20 years into the future. - thanks.

[obgyn65]

ok.

Dear ERD50, I would be most grateful if you could please kindly stay on the topic of this thread instead of making assumptions about forum participants' sexual orientation. Thank you very much and have a good weekend.

Quote:

Originally Posted by MichaelB Lets keep it friendly.

[Original Wally]

Quote:

Originally Posted by utrecht Isn't that the exact reason that people get stuck in the "one more year" syndrome?

+1

My lesson in that regard was in 1990. I was part of a group of guys who took walks on break twice a day. One of our group, Bob, had been with the company since 1959. 31 years. And was into the "one more QUARTER" analysis. One more. One more. Until that day he had a massive coronary at his desk. Retired that day, had a heart transplent and a completly different reitrement than he had planned for. That was MY lesson. I left the first day I could, and am grateful I did.

[Accidental Retiree]

Quote:

Originally Posted by W2R All of my retirement savings accumulated after my divorce at age 50, for various reasons. Each year I earned more money and spent the same, and so my yearly savings toward retirement increased. So yes, I saved more from my salary towards retirement during my later years at work. But you know, there is another very important thing about one's older years. That is, when one's future becomes shorter, each year becomes more valuable and cherished because time does not seem limitless any more. Also, for some of us the importance of additional luxuries lessens as we grow older and gain a broader viewpoint on life. I would not trade the past three years of retirement for anything. I did not feel that way when I was in my 30's.

+1

[ERhoosier]

Quote:

Originally Posted by obgyn65 The point I am trying to make is that there seems to be "plateau years" vs "threshold years" in ER budget planning.

100% agree. Threshold Years tend to be due to:
- Vesting in retirement accounts
- Vesting in company options
- Meeting age &/or yrs of service to qualify for pensions
- Large increase in net income vs prior w#rking yrs
- Rare special issues (like qualifying for large inheritance by w#rking 'til age whatever, special corp buyouts, etc.).

For many who have saved consistently & followed LBYM lifestyle, once one has vested/qualified for whatever items they ever reasonably will, those last plateau yrs can have mighty slim reward for the yrs of life wasted at w#rk. YMMV.

[Alan]

My threshold year was the year I retired.

I was eligible to leave and immediately receive a pension plus I qualified for retiree HI. Made a huge difference.

[martyb]

I guess this year, 2013 would be my threshold year, since I turned 55 in January and am now qualified by age & year for my main pension. I will retire sometime this year. Have to wait another 4 yrs + some months for another smaller, but still substantial pension. I'm already retired from that position though, just have to live long enough to start collect it at 60.

[ERD50]

Quote:

Originally Posted by obgyn65 ok. Dear ERD50, I would be most grateful if you could please kindly stay on the topic of this thread instead of making assumptions about forum participants' sexual orientation. Thank you very much and have a good weekend.

I made no assumptions, it was a joke based on the earlier call/response.

It was not a joke/comment regarding sexual orientation (which I could not care less about, it's none of my concern), just a joke on the logic - you don't like A, then maybe you like the opposite of A? It is one of the classic forms of humor - there really are only a few basic 'jokes', and many variations on a theme. No harm intended (how could there be?) - I didn't think that would need an explanation in that context.

It was actually a little funny if you just loosen up a bit. I've always heard that laughter is the best medicine, but maybe that is not one of the generally accepted protocols?


-ERD50

[LakeTravis]

Quote:

Originally Posted by photoguy I've reached a point now where investment gains can be significantly larger than savings from income. It's nice to have the gains but it also feels arbitrary as I no longer can control my portfolio growth completely.

+1

A "Threshold" for me was when my investments grew large enough that they routinely see returns larger than my own routine contributions.

[rayvt]

Actually, ERD50's little comments were funny. The 2nd a bit funnier than the first, since it was a follow-on that built on it. Gee, learn a little bit about the mechanics of humor.

And then obgyn's Stop Sign picture! That was funnier still. I pictured a standard low-brow movie scene where the up-tight substitute teacher stamps their feet and says, "That's not funny!" Followed by the entire class ROTFLing.

----------------------
Those who cannot take a joke are doomed to forever be the butt of jokes.

[ERhoosier]

Quote:

Originally Posted by LakeTravis +1 A "Threshold" for me was when my investments grew large enough that they routinely see returns larger than my own routine contributions.

Or when annual investment returns exceed yr's total expenditures- a very nice 'problem' few are fortunate enough to have.

[martyb]

Quote:

Originally Posted by LakeTravis +1 A "Threshold" for me was when my investments grew large enough that they routinely see returns larger than my own routine contributions.

Agree! That was a sweet situation last year with my TSP and so far this year as well. In 2012, my TSP increased at a rate far greater than my contributions (Contributed $22,500 but had total increase of nearly $64,000). It was great!

So far this year, the increase is about double my contributions...

I ALMOST hate to retire this year. I said ALMOST!

[obgyn65]

I am lucky to have this problem. But making the jump to FIRE is difficult. The non-linear pattern my FIRE budget over the last few years is interesting, maybe others have witnessed the same. It looks like it's time independent and it changes drastically every year.

Quote:

Originally Posted by ERhoosier Or when annual investment returns exceed yr's total expenditures- a very nice 'problem' few are fortunate enough to have.

[MichaelB]

Quote:

Originally Posted by obgyn65 I am still interested in the non-linear pattern my FIRE budget over the last few years. It looks like it's time independent and it changes drastically every year.

You might consider looking at each component of your future income stream separately and seeing how it relates to time and contribution. Most of your future annuity income should then be arithmetically smoother, easier to project.

[obgyn65]

Perfect. I like this idea and will work more on my xls file. Different annuities will be bought over the years, only deferred annuities up to my mid 50s I guess and then SPIAs much later in life to make the most from mortality credits. Another form of smoothing. Interesting feedback, thank you Michael.

Quote:

Originally Posted by MichaelB You might consider looking at each component of your future income stream separately and seeing how it relates to time and contribution. Most of your future annuity income should then be arithmetically smoother, easier to project.

[HighRoller]

Quote:

Originally Posted by martyb Agree! That was a sweet situation last year with my TSP and so far this year as well. In 2012, my TSP increased at a rate far greater than my contributions (Contributed $22,500 but had total increase of nearly $64,000). It was great! So far this year, the increase is about double my contributions... I ALMOST hate to retire this year. I said ALMOST!

You know, you might just miss that ~2 hour drive each week between Bossier City and Lufkin when you retire?

[Accidental Retiree]

Quote:

Originally Posted by W2R All of my retirement savings accumulated after my divorce at age 50, for various reasons. Each year I earned more money and spent the same, and so my yearly savings toward retirement increased. So yes, I saved more from my salary towards retirement during my later years at work.

WR2, you are very inspiring. For those who think it is all over at 50, you show it can be just the beginning of a new and better life.

[martyb]

Quote:

Originally Posted by HighRoller You know, you might just miss that ~2 hour drive each week between Bossier City and Lufkin when you retire?

I won't miss doing it twice a week, but I'm sure I'll go back now & then to visit friends/co-workers once I retire. I like it down there pretty well (I'm sitting in Bossier right now) but with 2 of our kids & 2 grand kids here in LA, plus the wife wants to stay in LA, I'm pretty sure I'm out-voted.

[UserRequested]

Quote:

Originally Posted by obgyn65 A recent post by another participant mentioned that he/she adds $6k a year to the annual ER budget by working one more year. My annual ER budget increases about $20k per year worked (depending on the use of annuities or not). .

Doesn't how much one adds to their ER budget depend on personal assumptions, such as:
1. withdrawal rate
2. maintaining principal or drawing down assets
etc

In your case is the $20k an increase in returns from an actual savings of say $667k (at 3% withdrawal of income only) ?

I look at my increased annual budget as only the additional income generated by the amount I can put away each year I work while preserving the principal in real terms

[UserRequested]

My apologies, just read your response from y'day. Makes sense now