Do I Have Enough To Retire?

[RetiredAt49]

My situation:
- Age 49
- Married w/ one teenage left (we have 529 so college paid for)
- No debt (excluding alimony to ex-wife at $1,500/month but that's factored in our annual expenses)
- $1.8 million in a brokerage account (100% equities being managed with a Wealth Management Company)
- $500,000 in IRA’s
- $200,000 in savings account
- $500,000 primary home (paid off)
- $500,000 cabin (paid off)
- $1,500,000 investment properties that generate approx. $45,000/year (which isn't great because two kids live in a couple of properties but we have 6 units total). We plan to sell them over the next 3-5 years.
- $6,400/month for the next 8.5 years (business buyout and tax free)

- Needs/wants: $150k/year (after tax) for the next ~20 years and then I suspect in our 70's that figure will drop to ~$100k/year.

By the way, SS should be around $3,800 for me and half that for my wife at max retirement age.

 

[pb4uski]

Just broadbrush, probably. You have about $4.6m with the investment properties and the buyout. $150k/$4.6m is 3.3% WR which seems safe enough off-the-cuff and you have SS as the cherry on top.

Have you run your situation through FIRECalc or Quicken Lifetime Planner?

 

[RetiredAt49]

Have you run your situation through FIRECalc or Quicken Lifetime Planner?

Nope but we have had two financial planners (Fisher Investments and DA Davidson) crunch the numbers and they said we are good. What’s the link for those two tools?

 

[RetiredHappy]

I think you have enough. When you use FIRECalc, you should put in before tax amount, and I would suggest using $200K as what you need to live on.

A couple of points to note about SS:
- If you are reading the current statement that says that your SS at 70 is $3.8K per month, it assumes that you will continue to work and contribute at the current rate. If you are planning to retire now, you need a more accurate calculator. I download "AnyPIA" calculator from the SS website and enter in my SS contributions for each year, and when I would stop working. SS uses top 35 years of earnings in their calculation. In my case, I only contributed for 18 years before I retired, making the rest of the years 0, essentially halving my contributions.
- Spousal SS benefits max out at half of your PIA, which is the amount at your FRA, at her FRA. Assuming your PIA at 67 is 2,800, spousal benefit at her FRA is only $1,400 per month. It won't grow more than that even if she waits to collect beyond her FRA.

I like to use Fidelity's retirement planning tool. You don't need an account to use it. It is very detailed and allows you to enter precise expenses by duration. Here is the link: https://www.fidelity.com/retirement-planning/overview

 

[chassis]

Looks OK to me. If you like to manage your own investments, you might want to think about exiting the investment manager relationship to save on their fees.

 

[Out-to-Lunch]

Nope but we have had two financial planners (Fisher Investments and DA Davidson) crunch the numbers and they said we are good. What’s the link for those two tools?

Here is Firecalc: https://firecalc.com . Also, note that this link is near the bottom of each page on this forum!

 

[kgtest]

Yes, you have enough based on the data provided. You are retiring into an all time highs...but most people do so I don't even know why I bothered to type that. Beware of SORR as it could be a thing with all the $$$ being printed. Maybe not an issue with all your liquidity though IMHO.

 

[Big_Hitter]

I glanced and it looks like you are liquid for 30x the 150k spend - I'd say yeah, you can prolly fire on that but recommend modeling

 

[pb4uski]

...Have you run your situation through FIRECalc or Quicken Lifetime Planner?

Nope but we have had two financial planners (Fisher Investments and DA Davidson) crunch the numbers and they said we are good. What’s the link for those two tools?

Here is Firecalc: https://firecalc.com . Also, note that this link is near the bottom of each page on this forum!

Quicken Lifetime Planner (QLP) is included in Quicken Deluxe and higher versions. It is an easy to use, fairly intuitive retirement planner that covers a lot of the bases.

The only bad part about QLP is that it is deterministic and doesn't cover off sequence of returns risk (SORR) but if your ultimate withdrawal rate (WR) is low enough you really don't have to fret much about SORR.

I did my base plan in QLP and then used FIRECalc and other stochastic tools to test that plan for SORR. Everything gave me different versions of a gree light so I then felt comfortable pulling the trigger.

 

[ncbill]

Definitely sell (or 1031 exchange) the properties...3% is a poor return on real estate given the add'l risk.

 

[RetiredAt49]

Definitely sell (or 1031 exchange) the properties...3% is a poor return on real estate given the add'l risk.

Duly noted... my wife is allowing 2 of the units to be rented for pennies (because kids live there) so it's not a great ROI.

 

[finnski1]

Duly noted... my wife is allowing 2 of the units to be rented for pennies (because kids live there) so it's not a great ROI.

Maybe just sell the other 4 units and slowly raise the kids rents on the other 2.

 

[Sojourner]

Maybe just sell the other 4 units and slowly raise the kids rents on the other 2.

Yes, absolutely, and sell them ASAP, before this massive, unsustainable real estate bubble bursts. I wouldn't wait 3-5 years to sell investment property (that's not even generating very good income) in this hot RE seller's market.

 

[txtig]

You say you are expecting spending at $150k per year dropping to $100k per year at age 70.

Our current spending is close to $150k per year and we’re quickly closing in on 70 (less than 2 years away). I don’t foresee anything that cause a significant drop in spending. If anything, our spending might increase due to higher medical and dental expenses.

So, unless there’s a specific circumstance that will cut your spending by a third at age 70, you may want to reconsider your assumption. We’re certainly not planning on any lifestyle changes just because we pass 70.

 

[RetiredAt49]

You say you are expecting spending at $150k per year dropping to $100k per year at age 70.

Our current spending is close to $150k per year and we’re quickly closing in on 70 (less than 2 years away). I don’t foresee anything that cause a significant drop in spending. If anything, our spending might increase due to higher medical and dental expenses.

So, unless there’s a specific circumstance that will cut your spending by a third at age 70, you may want to reconsider your assumption. We’re certainly not planning on any lifestyle changes just because we pass 70.

That is great insight and I'd love to know (if willing to share) where your money goes? For instance, we don't have any debt (e.g. house is paid off). My in-laws (similar situation as us) said they spent about 125k - 150k annually until 70 and then they stopped traveling as much and they have a hard time spending 100k most years.