How Much is Enough?

[ScaredtoQuit]

This is the year I said I would do it. But the more I think about pulling the plug, the more ambivalent I get. Can someone give me the benefit of their experience and wisdom and let me know what they think of my situation?

Here's the scoop: I would like to retire later on this year shortly after I hit 55. I will have a 401K with about $1.5MM and non-qualified assets of about $150K. My wife, who only worked after the kids grew up will be retiring with a pension of about $400 per month. My house, which is worth about $500K is mortgage free. Except for $15K outstanding on my line of credit, I have no other debt to speak of.

After my 401K contributions and other very hefty savings, I am currently living on a take-home pay of about $4,000 per month. However, my problem is that I am not really living on $4,000 per month. I routinely dip into savings for vacations, gifts, and other niceties my better half is partial to. (a source of some friction in our relationship) In addition, I don't have any car payments factored into that $4,000 per month; In another seven years or so, I know that I will have to replace my two and three year old cars.

What do you think my odds are of finding happiness? Is anyone out there in a similar situation that has already taken the plunge able to give me the post-ER perspective?

 

[dex]

Take a look at the "What did you spend in 2006" thread.
Compute your current spending and then what you estimate what you will spend in retirement.
Then run Firecalc. Let us know what you find out. We will then be able to give you more feedback.

 

[sgeeeee]

If your fear is about money, then do more calculations . . . analyze your spending in more detail, make a detailed retirement budget, run historical and monte carlo simulators, etc. until you feel confident. But it doesn't sound like that is your issue.

If your issue is more about lifestyle and happiness without your job, you need to think through this and discuss with the people you will be sharing your retirement time with. What do you get from your job that you might miss? Satisfaction? Social interactions? Sense of accomplishment? Feeling of authority? . . . Whatever you are getting there, you need to figure out how to replace those things as much as you need to figure out how to replace the paycheck. Clubs and volunteer groups can offer some of the same kinds of things a job can offer.

Another problem we hear from some recent retirees is that the sudden full-time exposure to their spouse can foul up the relationship. For many of us, the opposite is true, but if your relationship suffers from full-time togetherness, then one or both of you will probably want to find activities to do alone.

Good luck.

 

[ScaredtoQuit]

Where can I find the "How much did you spend in 2006" thread?

 

[sgeeeee]

If you want to do some analysis of spending, you can download several budget spreadsheets at:

http://www.golio.net/My_Homepage_Files/Page11.html

Go to Section 3.3 and look for the "download all excel spreadsheets" link.

 

[gindie]

Where can I find the "How much did you spend in 2006" thread?

It's under the Fire and Money category.

 

[Nords]

Welcome to the board, Scared. The good news is that many other posters have dealt with the same things you're experiencing.

Where can I find the "How much did you spend in 2006" thread?

That thread is here: http://early-retirement.org/forums/index.php?topic=11335.0

As you think of other subjects or questions, you can click on the "Search" button at the top center of the page and look for keywords. "Advanced Search" provides more options. Or go to a likely section of the board and look at the subjects of the first page or two of posts.

 

[Dog]

ScaredtoQuit, I think I can relate to what you might be feeling. Sometimes it isn't what you do spend, but that you have the option to spend if you want to. There is some satisfaction in knowing that you "could" buy something if you wanted to...not to mention a sense of security of knowing that you can still contribute to funding retirement. I also struggle with trying to figure out how much is enough. I sometimes wonder if I'm not emotionally secure in that area. :

 

[firewhen]

On the nonfinancial, how do you feel when you are away from work? I just had about 10 days off for the holidays, and now after 2 days back at work, believe me I do not feel the same. While I might be a little more bored when not working, it would be much less stressful. Maybe the next time you have some time off, don't travel anywhere, but stay close to home and imagine what you might do if you were home full-time.

For the financial, I do all my spending and bill-paying out of only 3 accounts, so it was easy to figure what I have spent the past few years. Review your old statements. It is good you remembered one time expenses, like car purchases. I would also add health insurance costs (including dental and drugs) after you stop working. If you have a house, figure in some major home repairs, especially if you think you will need a new roof, etc. soon. Don't forget taxes. While at 55 you should be able to tap the 401k without the 10% penalty, you still will have some fed taxes on the withdrawals and maybe state tax too.

You should be able to pull out $50,000 to $60,000 per year plus the pension.