Thankful to find this forum

[Miranda]

Hi all,
I am 48 and DH is 54. We've been married for 27 years and retirement has always been that fuzzy, out of focus carrot dangling out there somewhere. I recently wondered if we could retire when DH turns 60 in 5.5 yrs. Our situation is pretty straight forward:

no debt or mortgage. we do have property Taxes ~10k/yr. zillow home value 430k(for whatever that's worth)

2 kids (22 and 24):youngest kid graduated college 12/2012. has moved out and is independent(no student loans). oldest kid has learning disabilities and is slow to launch, but we are determined to launch, though may be in a supported way.

combined income 200k

me 401k: ~200k
403b ~15k
ira ~13k
lump sum pension (don't laugh)~27k
I was out of work force when kids were small, and then another hiatus to assist disabled daughter.

DH 401k ~750k
pension ~50k/yr if he retires at 59.5. not cola'd

85k cash (online savings acct)

We plan on maxing out 401k contributions for the next 5 years (DH also gets matching but I can't remember how much)

We also plan on saving 40k/yr after tax for the next 5 years, assuming our situation doesn't change.

My husband has always been LBYM guy. I am a little late to the party. I always wondered why we couldn't have the latest stuff everyone else had, why did we always have to worry about the future...ha ha, I get it now.

I have learned a lot from this forum, and now the carrot is coming more into focus and it looks as though it may be in reach. 1 potential concern is healthcare premium cost; it is 1 reason we probably wont pull the trigger sooner than 2018.

We plan on a 2.5% withdrawal rate from 401k accts and we haven't figured out how to maximize SS benefits.

We are in a fairly good position due to 3 or 4 monetary gifts that came in 10k allotments from an aging family member. We put the money toward our home and our kids college funding through the Texas Tomorrow Fund, which was a wonderful deal for us, not a great deal for Texas.

We would like to leave some money to our kids as a legacy/pay it forward fund.

Obviously we have a lot to figure out in the next 5 years, and I am very thankful to have found this forum!

M

 

[padlin00]

Welcome Miranda, for a decent idea of how you'd do financially once retired you can try plugging your numbers into Firecalc, I-Orp, or Fidelity's Retirement Income Planner if you have an account.

 

[LitGal]

Welcome, Miranda!

I didn't discover this site until the week I retired. Yup, a little late; but the past year of reading it and asking others questions has been invaluable.

As you browse the forums, you'll be amazed at what you can learn from the other members. Their insights have already informed investment decisions, recreation planning, and basic approaches to ER for both DH and me. Plus, he and I are always telling others about the site, since so many folks would like to ER (or at least be as prepared for regular retirement as possible).

Best wishes as you continue your planning and preparation over the next 5 years!

 

[DeborahB]

Welcome to the forums! I think you'll find a lot of wisdom (along with jokes) here

 

[heeyy_joe]

Welcome to the board. You are well on track - stay on track!

 

[MuirWannabe]

Hi all,
We put the money toward our home and our kids college funding through the Texas Tomorrow Fund, which was a wonderful deal for us, not a great deal for Texas.
M

Texas Tomorrow Fund was easily the best investment decision I ever made. I remember selling some dotcom stock in 1998 and purchasing 3 full tuition programs for my kids. For the next few months I continued to see the market go up and thought to myself how stupid I was for having sold to buy those tuition funds. Then the bubble burst, tuition inflation went crazy, and it blossomed into me being a financial wizard!

I've made my share of bad decisions. But that one worked out extremely well.

And yes, not so well for the state of Texas.

 

[Gumby]

Welcome, Miranda. Have you been tracking your spending closely enough to have a good idea of how much you'll need after retirement?

 

[walkinwood]

Welcome to the forum.

Now that you have that "carrot" in sight, I recommend getting an education on investing and withdrawal methods (SWR). There are a number of good book recommendations on these subjects in the forums, but here are a couple to get you started.

I think William Bernstein's The Four Pillars of Investment is a great book to start. It is long, but thorough & you get a good understanding of the subject. You'll need that understanding to stay on your path when things get rough (Think 2008).

For withdrawal methodologies, I can't think of a good book, but Bengen's first paper is a good start. Once you have that background, you'll be able to pick up the other methodologies too.
http://www.retailinvestor.org/pdf/Bengen1.pdf

Another great book is Bob Clyatt's Work Less Live More.

Welcome & all the best.

 

[Miranda]

Thanks for the welcome!

Padlin00/Gumby: Thanks, I did plug a few scenarios into FIREcalc. Things look really good as long as the expenses part of the equations is realistic/valid. Now that our household expenses are closer to what they will be when we retire, we are going to begin to track expenses.

LitGal/thinker25: I have been lurking for a few months now. And I have learned a lot. I am embarrassed to say, I didn't understand the concept of SWR. I had a lot of worry about how you decide how much to withdraw every year (half of the previous years returns, and keep your fingers crossed this will keep you solvent and maybe leave something for the kids?) DH has been a good provider and saver, but he was also a bit unclear about how to approach actually implementing "retirement". Just doing a quick review of our situation, and asking him to run pension scenarios on benefits website, has given him peace of mind. So this forum has helped a great deal already.

Heey Joe: Thanks, and we definitely plan to stay on track, finish line (or is it the starting line) is in sight!

Muir_wannabe: I remember a neighbor poo-pooing the idea of getting into the TTF in 1996, saying the stock market would do better. My DH was doing it purely for the peace of mind; knowing the kids education was paid for no matter what the stock market did. Kids entered college in 2006 and 2008. I give DH a lot of credit for being all over that deal like white on rice.

Walkinwood: Thanks very much for the resources, I will definitely check them out!

 

[obgyn65]

Welcome to the forum, Miranda.

 

[cranberryjoe]

Welcome Miranda. Looks like you're doing all the right kind of planning.

Thanks, and we definitely plan to stay on track, finish line (or is it the starting line) is in sight!

I used to consider it the finish line, but now that it's in sight I call it the starting line!

 

[steelyman]

I used to consider it the finish line, but now that it's in sight I call it the starting line!

For sure. I wish I could say something more intelligent/wise, but ummm nope. Glad to see you here.

 

[Miranda]

I hope it's ok to bump this thread for an update. I ended up retiring last summer just before turning 51. Work was having a negative impact on my health. I was starting to have arrhythmia issues that seemed to be exacerbated by stress. Things came to a head when I had a very bad episode of SVT (240 bpm) that required EMT's to elctroconvert my heart at my home.

My husband is going to retire this summer when he hits the 35 year mark with his megacorp. He will be just shy of 58.

Our situation has improved somewhat since I first posted here. his 401k hit the $1M mark, and my various retirement savings are ~ $330k. DH's pension will be 4k/month when it starts, non-COLA'd.

We have $130k in after tax savings and the house is paid off($526k zillow). We also have an interest in a self storage facility (llc) that provides variable income that seems to be between $5600 and $8400 a year. When/if the facility ever sells, we should net $120k-$160k.

DH is helping manage his mom's (healthy 84 y/o) money since his dad died 2 years ago. He is likely to inherit 400-500k from his mother after the estate is split 3 ways. I wouldn't say we are counting on this money and realize it could be spent quickly on care should MIL require it. But I think it is reasonable mention it.

We are currently living on 4k a month as a "floor"/basic needs budget, including setting aside $850 a month for property tax. So far this is quite comfortable and also allows for some eating out and entertainment tho not extravagant: so it doesn't feel as austere as I thought it would. Although I think the pension will be taxed.

We plan on withdrawing 2.5% (~30k?)of the total amount of our combined retirement savings per year. This money is for trips and big ticket repairs/maintenance items.

health care is an issue also. Megacorp no longer provides health insurance to retirees. But they have a funny-money account that will provide insurance for ~3 yrs. We may consider reducing our withdrawal to manipulate income for subsidies. We will wait and see what the situation is at the time.

I have looked at downsizing and/or moving to a condo downtown but it turns out we really like where we are and have spent 15 years getting things just the way we like them. We are in a nice neighborhood serviced by the most desired schools in a good school district, so houses sell quickly in our immediate area. So despite the high tax bill we see the house as an asset that we want to hold on to right now.

So that is our situation and we think it will work. I am currently taking a coursera course in python with my daughter for fun, but who knows, maybe I can still go back and earn a buck if I need to.

I am so grateful for this forum. As I mentioned in my first post, retirement was this fuzzy goal that we really didn't know how or when to actually implement.

After finding this forum 3 years ago and reviewing our situation back then with my husband, he was so relieved that we were going to be ok. There was this ease that came over him that I hadn't seen in all of our years together.

Thanks again!

 

[Aerides]

wonderful update, thanks for sharing!

 

[Ronstar]

wonderful update, thanks for sharing!

+1. Congrats Miranda on your ER!


Sent from my iPad using Early Retirement Forum

 

[Miranda]

ok, another update.

DH did not retire until this past week 5/1/2017, due to being asked to finish out a project.

My father died last year (81 y/o). It all happened fairly quickly after a very late diagnosis of stage 4 lung cancer. It's been a shock to the system, since he was previously so vigorous and caretaker to Mom. There's been a lot of stress and travel but things are finally settling into new normal.

Our financial situating is a little improved since last years post:

Retirement acct's (less than 10% of this is in ROTH, we were a little late to ROTH party)
DH 401k > 1.2M
DH IRA ~ 20k
My 401k ~ 383k (I rolled my 28k lump sum pension into 401k)
IRA + 403b ~ 40k

After tax
vanguard funds 140k
online savings 225k (netted 200k after sale of investment property, but no more income)
485k home value (reduced zillow estimate, tho I think we could sell easily for 550k as is)

Our floor (austere) budget is 4k/month, equal to non-cola pension.
medical premiums and property tax are 50% of that budget, tho medical premiums are covered for next 3 years.

DH would like a fairly high WR (5% of total invested assets) for the first few years of retirement. This for a fat travel and hobby budget. I really don't think would would spend that much, we've never spent that much in a year, and we pride ourselves on our frugal travel budgets. Of course we do want to do a viking river cruise at least 1x. We'll see.

I feel strongly about leaving a significant legacy for kids, so I prefer the 2.5% wd rate, which I think more closely matches our non austere spending (when added to pension). DH's financial judgement has gotten us this far, so I will let him make the call.

We also have to update a masterbath in our house, but we would like to do that on a tight budget. I took care of some other home updates in my last year of work (interior paint, carpet, new fence, new patio). But home maintenance items always pop up. Also paid for a wedding during last year of work FWIW.

Thanks again for this forum. I try to browse it at least 1x a day because there is always something useful or interesting.

Miranda

 

[Blue Collar Guy]

Wow, im terribly sorry to hear about your Dad. I enjoy the updates. I like to read the old posts and see where people are now, and how their plans turned out

 

[evilanne]

It's ok to splurge a little for a couple of years...you both worked hard to get here. Enjoy it!

I 'm still trying to figure out when to start withdrawing retirement funds. We spend so many years saving that I think it will be difficult to change our way of thinking.

 

[tps7742]

Congrats on retirement and I am sorry to hear about your Dad. This is a very good forum. I retired a couple of years ago with a couple thoughts of thinking omg what have I done. Anyhow by searching and reading on this forum it was very helpful to keep me grounded.

 

[aida2003]

Miranda,
Congratulations on your successful retirement...let it be smooth sailing as many more years pass for your family.

In regards to your small Roth IRA, you're late to contribute unless you have earned income, but if you wish you could convert some. However, you should research first before jumping the gun and I'm not knowledgeable to advise, but maybe other forum member can give you more guidance if you posted your questions as a separate thread.
The good thing is that you spend very little that you could increase 'paper' income for RIRA conversion purposes and still pay little in taxes. The tricky part is finding out how such increased income would affect your health insurance premiums.