An Introduction

[Coach]

Hello to all. My introduction: I'm 54, single, childless, a software developer, and (I think) FI. My plan is to retire in 12 to 18 months when a large project I'm involved in will be (I think) under control. If I can last that long; work has lost much of its joy and I do sometimes think about leaving earlier. My retirement expense budget is $40K a year. I'll detail my assets below, but they're mostly in a 403(b) from which I can withdraw penalty free if I'm at least 55 and separated from service. In a few months I'll turn 55 and be eligible to retire. Retiring allows me to remain in my employer's health plan, paying the whole premium myself. My medical history makes this attractive. There are a few other minor advantages to retiring rather than resigning.

My tax-deferred retirement savings, all at TIAA-CREF, consist of $550K in a 403(b), $63K in a traditional IRA, and $38K in a Roth IRA. Retirement savings are about 50% equities, 20% TIAA Real Estate and 30% TIAA Traditional. The latter two accounts are kind of hard to classify -- the Real Estate account holds commercial real estate and has a NAV that varies; the Traditional account guarantees your investment, pays a fixed interest rate that changes periodically, and has some withdrawal restrictions.

I have about $60K in other savings -- $50K in various mutual funds and $10K in money market.

With my three siblings I am the beneficiary of trusts set up by my Grandmother and Mother, currently worth about $1.6M, so my share is $400K. Dividends and income produced by these trusts are paid to my Father for as long as he lives. Then the assets will be divided among the four siblings. Dad is 89 and in pretty good health. The trusts are invested about 50% in equities and 50% in income-producing investments. The trusts are irrevocable and forbid distribution of principal, so it seems reasonable to include them in my planning. I assume they will not appreciate in value.

My only debt is $25K on a house worth about $120K. I will be able to collect Social Security.

Firecalc and Quicken tell me I'm good to retire now when I assume a $300K trust distribution in 10 years. The T. Rowe Price calculator is not as confident, so I'm ignoring it .

I've learned much in the time I've been reading this board, and I look forward to learning more from all of you in the future. I don't have any specific questions now (I'm sure that will change!), but if anyone has any thoughts or comments I'd be pleased to hear them.

Coach

 

[JPatrick]

Welcome coach.  Looks to me like you've worked and planned hard towards your ER.  Sounds like you are in pretty good shape.
Given that you are apparently sports savy, who is going to win the Superbowl?

 

[Nords]

Welcome to the board, Coach.

I'm assuming you've counted your healthcare premium payments as part of your $40K/year expenses?

Your portfolio looks like it could make it, but your initial withdrawal rate of $40K from $711K is about 5.6%. Of course that withdrawal rate will drop when you receive Social Security and trust distributions.

Since you're pushing the margin of safe withdrawals you might want to look out for large "one-time" expenses-- a new roof, a replacement vehicle, a fantasy vacation, or other surprises. Even rising property taxes could perhaps put a crimp in your plans.

You might want to check your Social Security distribution. The mailed statement assumes you're going to work until age 62 but as an ER your distributions will be lower. You're going to want to enter your entire earnings history (from the mailed statements) into their detailed online calculator and then add zeros for your income between ~56-62.

But even if you retire into the middle of a recession, would there be a part-time or consulting market for your skills? A little of that can do a lot of good for a marginally-funded portfolio.

 

[Coach]

Given that you are apparently sports savy, who is going to win the Superbowl?

JPatrick, thanks for the welcome. I've got my money on Seattle -- but you should know I got the nickname "Coach" when my teammates decided it was the gentlest way to keep me off the ice.

 

[Coach]

Welcome to the board, Coach.

I'm assuming you've counted your healthcare premium payments as part of your $40K/year expenses?

Your portfolio looks like it could make it, but your initial withdrawal rate of $40K from $711K is about 5.6%. Of course that withdrawal rate will drop when you receive Social Security and trust distributions.

Since you're pushing the margin of safe withdrawals you might want to look out for large "one-time" expenses-- a new roof, a replacement vehicle, a fantasy vacation, or other surprises. Even rising property taxes could perhaps put a crimp in your plans.

You might want to check your Social Security distribution. The mailed statement assumes you're going to work until age 62 but as an ER your distributions will be lower. You're going to want to enter your entire earnings history (from the mailed statements) into their detailed online calculator and then add zeros for your income between ~56-62.

But even if you retire into the middle of a recession, would there be a part-time or consulting market for your skills? A little of that can do a lot of good for a marginally-funded portfolio.

Nords, thanks for your input. My budget does include health insurance, but I think I'd better up the amount in anticipation of greater than inflation price increases. In general I've tried to be conservative in my planning, such as a 20% income tax rate and $500 a month budgeted for "lumpy" expenses like car and appliance replacement. I'm used to living modestly and don't anticipate changing, although I do plan to up my greens fee expenditures significantly -- but just at the local muni. Your suggestion that I verify my anticipated SS is a good one and something that I'll do immediately.

My bailout position is to go back to work if my plan isn't working. I won't make as much as I do now, but I figure I can make expenses and give the retirement funds a few years relief from withdrawals. I do have this sense of time going by, and I'll be really mad if I die before I have a chance to enjoy the retirement I've been saving for 30 years for