Would love to get some feedback on our retirement plans as they begin to take shape.
Current ages: me 53, DW 53
Target retirement ages: me 54, DW 54
Life expectancy used for planning: me 95, DW 95
Anticipated Retirement Spending:
-$110,000 per year (we’ve been living off this ballpark amount last 2 years)
-Rough breakdown = $70k non-discretionary/$40k non-discretionary
Includes
-$20k healthcare (COBRA, then ACA)
-$18k food/restaurants
-$18k travel/fun/hobbies
-$16k property tax/HOA (coastal California)
-$8k utilities
-$6k automotive/gas/fees
-$6k sinking fund for car replacements, capital improvements
-$4k taxes
-$4k clothing
-$4k home maintenance
-$3k insurance
-$3k other
We will be moving to coastal California within 1 year and expect to spend ~$800k cash on a 2BR home/condo.
Income in Retirement:
Pensions
-DW pension1: $22,500 (age 65, no COLA, 50% survivor benefit)
-DW pension2: $4,150 (age 65, no COLA, 50% survivor benefit)
Social Security
-me: $32,000 (conservative estimate, age 70)
-DW: $6,000 (takes into account GPO/WEP impact, age 70)
Net Worth ~$3.3M
Retirement Portfolio = current assets ~$2.2M
-60/40 asset allocation (12% international)
-primarily 3-fund portfolio
Taxable ($504k)
-$360k CD ladder/cash
-$144k Vanguard Total Stock Market
Tax Deferred ($795k)
-$329k S&P 500 fund
-$227k Fidelity US Bond Index Fund
-$141k Vanguard Total Bond Market
-$79k Vanguard Total Bond Market
-$19k Target Date Fund
Tax-Free (Roths, HSA) ($858k)
-$467k Vanguard Total Stock Market
-$338k mostly Vanguard Total International Stock Index
-$53k Vanguard Total Stock Market
Additional assets ($1,145k)
-$665k primary home net proceeds (conservative; will be sold in 2018)
-$400k rental property net proceeds (conservative; will be sold in 2018)
-$80k cash set aside for new car & home/rental renovations
Possible inheritance (not used for planning purposes)
-$1-3M in 10-15 years
FIRECalc says if we don’t save another dime and then start drawing down our nest egg ($2.6M = $2.2M portfolio + $0.4M from rental property) beginning in 2019, we can sustain $110,000 per year with a success rate of 100%. This assumes we pay cash for a new $800k home with no mortgage.
I’ve also been experimenting with i-ORP to determine optimal Roth conversions up to the 15% tax bracket. The Roth conversions seem to get complex when you also attempt to stay below income thresholds to qualify for ACA subsidies. I need to investigate more in this area, but conceptually would like to convert as much as possible of our tax deferred $s to Roths to avoid RMDs later in retirement.
MegaCorp demands have been extraordinary this year - it’s been very stressful for us both. We’re hoping we can down-shift our employment situations somewhat in 2018 to ease our way into a vibrant, active retirement.
Any insights you might be able to provide would be appreciated, including if you think we are on track. Thank you!
Current ages: me 53, DW 53
Target retirement ages: me 54, DW 54
Life expectancy used for planning: me 95, DW 95
Anticipated Retirement Spending:
-$110,000 per year (we’ve been living off this ballpark amount last 2 years)
-Rough breakdown = $70k non-discretionary/$40k non-discretionary
Includes
-$20k healthcare (COBRA, then ACA)
-$18k food/restaurants
-$18k travel/fun/hobbies
-$16k property tax/HOA (coastal California)
-$8k utilities
-$6k automotive/gas/fees
-$6k sinking fund for car replacements, capital improvements
-$4k taxes
-$4k clothing
-$4k home maintenance
-$3k insurance
-$3k other
We will be moving to coastal California within 1 year and expect to spend ~$800k cash on a 2BR home/condo.
Income in Retirement:
Pensions
-DW pension1: $22,500 (age 65, no COLA, 50% survivor benefit)
-DW pension2: $4,150 (age 65, no COLA, 50% survivor benefit)
Social Security
-me: $32,000 (conservative estimate, age 70)
-DW: $6,000 (takes into account GPO/WEP impact, age 70)
Net Worth ~$3.3M
Retirement Portfolio = current assets ~$2.2M
-60/40 asset allocation (12% international)
-primarily 3-fund portfolio
Taxable ($504k)
-$360k CD ladder/cash
-$144k Vanguard Total Stock Market
Tax Deferred ($795k)
-$329k S&P 500 fund
-$227k Fidelity US Bond Index Fund
-$141k Vanguard Total Bond Market
-$79k Vanguard Total Bond Market
-$19k Target Date Fund
Tax-Free (Roths, HSA) ($858k)
-$467k Vanguard Total Stock Market
-$338k mostly Vanguard Total International Stock Index
-$53k Vanguard Total Stock Market
Additional assets ($1,145k)
-$665k primary home net proceeds (conservative; will be sold in 2018)
-$400k rental property net proceeds (conservative; will be sold in 2018)
-$80k cash set aside for new car & home/rental renovations
Possible inheritance (not used for planning purposes)
-$1-3M in 10-15 years
FIRECalc says if we don’t save another dime and then start drawing down our nest egg ($2.6M = $2.2M portfolio + $0.4M from rental property) beginning in 2019, we can sustain $110,000 per year with a success rate of 100%. This assumes we pay cash for a new $800k home with no mortgage.
I’ve also been experimenting with i-ORP to determine optimal Roth conversions up to the 15% tax bracket. The Roth conversions seem to get complex when you also attempt to stay below income thresholds to qualify for ACA subsidies. I need to investigate more in this area, but conceptually would like to convert as much as possible of our tax deferred $s to Roths to avoid RMDs later in retirement.
MegaCorp demands have been extraordinary this year - it’s been very stressful for us both. We’re hoping we can down-shift our employment situations somewhat in 2018 to ease our way into a vibrant, active retirement.
Any insights you might be able to provide would be appreciated, including if you think we are on track. Thank you!
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