Retire at 56? Here's My Numbers and Situation

D

DeRosaNC

Dryer sheet wannabe
Joined
Mar 5, 2018
Messages
13
Location
Concord
Any comments welcome. Plan to pull the trigger in August of this year at 56. Been with same company 33-years with 401k and Pension. My bride and I track every penny we spend so we know what expenses will be, however, I added 8% just as a buffer. Company stopped pension this year so rolled it over to 401k and smartly allocated with help of professional. Wife is 56 and already retired with $1,912/mo pension. We do have a beach condo that is paid for that we rent out in Myrtle Beach SC (Shameless plug VRBO #633092). Also have $85,000 in credit union account that is not added to portfolio total as a safety net. It will grow about $5k/year with condo rental.

Also important to note our 401k is set up to where the early 10% w/d penalty does not apply.

Annual Exp: $72,343 (I added 8%)
Portfolio: $1,271,000
Years: 32
---------------------
SS (ME): $14,000 (62)
SS (SPOUSE): $10,000 (62)
Pension Income: $22,416 (2019)
Off chart spending reduction: $5,616 (Child Support Stops) 2021
Off chart spending reduction: $16,260 (Mortgage Stops) 2027
---------------------
Constant Spending Power
---------------------
Total Market Portfolio @ 1.00% Fees.
---------------------
Result:
115 cycles. Lowest and highest portfolio balance at the end of your retirement was $1,271,000 to $8,241,273, with an average at the end of $3,980,118. FIRECalc found that 0 cycles failed, for a success rate of 100.0%.
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I have run this so many different ways in regards to spending models and portfolio. Have to enter annual expenses up to $95k before it turns to less than 100%. I have also used so many different retirement calculators and all seem very positive. Any comments welcome and appreciated! Can't wait to retire!
 
Last edited:
Similar situation in terms of age and plan/desire to RE in 2018..but do not have the pension income you can apparently rely on.

Am I reading this all right in that you have a roughly $50K gap between pension income ($22.4K) and expenses ($72.3K) to cover until SS? If so, how do you plan to fund that gap? If it's from portfolio withdrawals, that's pushing the 4% max recommended..
 
If you have not done it yet, run the random performance for your portfolio returns too. I personally think that mimics reality more.
 
First 3-years I have (assumes Aug 31st retirement):
2018 - (Sept-Dec), $18,000 before taxes needed (also w/d $1,000 from condo checking or $250/mo to supplement).
2019 - Need w/d of $54,000.
2020 - Need w/d of $50,000 (Child support ends May 2020).

We'll take $3,000 annually or $250/month from condo checking to reduce amount taken from retirement accounts (at least first 5 years).

FireCalc didn't let me drill down to when a few items roll off.
The $5,616 actually rolls off mid-2020, but I entered 2021.
Wife's pension of $22,426 is actually being received now, but I entered 2019 as well.

Hope my calcs are correct anyway! Thanks for input.
 
Ran Random Performance with as low as 6%:
A portfolio with random performance, with a mean total portfolio return of
6 % and variability (standard deviation) of 6%.

Still at 100% success.
 
DeRosaNC said:
Ran Random Performance with as low as 6%:
A portfolio with random performance, with a mean total portfolio return of
6 % and variability (standard deviation) of 6%.

Still at 100% success.
Click to expand...

I think you're golden then. :dance:
 
Welcome DeRosaNC to the forum.
You didn't mention what year your mortgage payments end and I assume it is currently included in the 72k?
Yes, you could be around the 4% WR for 6 years, but would be below 2.5%WR starting at 62 yrs old.
I don't see an issue and if using many calculators (as I do) with 100% results, I would think you are fine.
 
I don't see HI mentioned. Is that in your budget?...or covered elsewhere?

Also, you say child support ends. Are there any college tuition payments in your future?
 
First 3-years I have (assumes Aug 31st retirement):
2018 - (Sept-Dec), $18,000 before taxes needed (also w/d $1,000 from condo checking or $250/mo to supplement).
2019 - Need w/d of $54,000.
2020 - Need w/d of $50,000 (Child support ends May 2020).

We'll take $3,000 annually or $250/month from condo checking to reduce amount taken from retirement accounts (at least first 5 years).

FireCalc didn't let me drill down to when a few items roll off.
The $5,616 actually rolls off mid-2020, but I entered 2021.
Wife's pension of $22,426 is actually being received now, but I entered 2019 as well.

Hope my calcs are correct anyway! Thanks for input.
 
Ready2Go said:
I don't see HI mentioned. Is that in your budget?...or covered elsewhere?

Also, you say child support ends. Are there any college tuition payments in your future?
Click to expand...

Yes. I have $50k set aside for college. Ex will also match. More than likely, daughter will attend community college or a state school here in NC.
 
Dtail said:
Welcome DeRosaNC to the forum.
You didn't mention what year your mortgage payments end and I assume it is currently included in the 72k?
Yes, you could be around the 4% WR for 6 years, but would be below 2.5%WR starting at 62 yrs old.
I don't see an issue and if using many calculators (as I do) with 100% results, I would think you are fine.
Click to expand...

Thanks. Mortgage ends in mid-2027.
 
What are your plans for Healthcare coverage? ACA?
 
I would model in health insurance "just in case". Company plans change. If numbers are still good, enjoy you retirement!
 
I assume that your SS estimates included $0 earnings for the years between retirement and age 62 for you and your spouse.

I think you will be fine funding the six year gap using your portfolio. Assuming the gap years spending totals $300k, you should have about $1M remaining in the portfolio at age 62. After SS begins at 62, you will have a $30k annual gap for a 3% withdrawal rate. After the mortgage is paid off a couple of years later, the withdrawal rate could be in the 1.5% range.

Assuming two paid off residences by 2027, that provides additional flexibility for long term care or medical costs.

Congratulations on your pending retirement!

Omalley
 
Omalley said:
I assume that your SS estimates included $0 earnings for the years between retirement and age 62 for you and your spouse.

I think you will be fine funding the six year gap using your portfolio. Assuming the gap years spending totals $300k, you should have about $1M remaining in the portfolio at age 62. After SS begins at 62, you will have a $30k annual gap for a 3% withdrawal rate. After the mortgage is paid off a couple of years later, the withdrawal rate could be in the 1.5% range.

Assuming two paid off residences by 2027, that provides additional flexibility for long term care or medical costs.

Congratulations on your pending retirement!

Omalley
Click to expand...

Your assumptions are correct, Omalley. Beach condo already paid off and no other debit except primary residence. Thanks for your input.
 
Because of the company provided healthcare at $10 per month you are fine. Most couples will be spending $15 - $20K on health car until Medicare. Also keep in mind when you do get on Medicare, your will be spending a lot more than $10 a month. I find it amazing there are any companies left providing retiree health care at that price. Good for you.
 
Don't forget taxes. Are they included in your Annual Exp number?
 
In your intro you say the company stopped the pension this year. Assume the 10 bucks a month for HC might be the next thing to go, because it is costing them a boatload of money.

I also think you are doing yourself a huge disservice by having both you and your spouse take SS at 62. Say you wife goes first and you lose both her SS and her pension income that's a big hit. One of you should probably wait until either FRA or 70 if possible.
 
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