I have a transitional plan I been working on for a while and would like some ideas.
My wife works for an iconic company (33 years) that is private and provides ESOP to their employees. They are a well known iconic company thats consistently retuned double digits over the years. Even during the worst market downturns their private stock has lost at most 1/2%. They are methodical and consistent with their expansion. They are also one of the largest landowners in the North East region with one of the best funded ESOPs in the country. They are consistent with little to no risk over the next 10 years of potential loss in their shares. They are the complete opposite of an Enron so please don't debate my logic in putting most of our eggs in their basket.
Conservate projections have them retuning as little as 12% per year over next 10 years to as much as 21% per year from past history, current management and future plans.
We plan to retire 5 years from now with the following projections.
Based on 6% market return over next 5 years we project having $500,000 in 401k
Based on 12% returns company quarterly dividends and distributions around $3,000,000 in 5 years. We are allowed to keep our ESOP for an additional 5 years after retirement. Projections are $4,500,000 in ESOP after 10 year period including selling of shares in years 9 and 10.
Please note that yes when ESOP math calculated years 6 to 10 my estimate is lower then projections assuming 12%, dividends and distributions. This is intentional as I plan for variations in estimates. Kinda plan for the worst hope for the best.
Combined my wife and I now earn $110,000 a year with expected salary increases of anywhere between 2.5-5% per year until we retire in 5.
We plan to wait until 70 to take social security and will be retiring at 56 and 53 years of age (Im younger)
We budgeted $24,000 a year for heath insurance
My main objective is to have at least 150% of our current income at the 10 year mark.
Objective 2 is to maintain this income through end of life to have best options for long term care facility if necessary. I want to be able to afford the best. So I don't want my money to last a specific date I want the income to be consistent through to end stage and beyond to ensure this.
We don't have kids so not concerned with leaving anything for airs.
The plan...
I love idea of fixed income for life without market risk so I love idea of Simple Lifetime annuities from AA- and better companies. They have been rising as of late and at are age we are close to 5% already if we bought in for guaranteed lifetime with 100% death benefit for spouse.
I want to secure lifetime of 150k Per year when we take full control of our ESOP in 10 years.
For the first 3 years of retirement I plan on spending down our 401ks at our $150k per year.
In year 4 and 5 of retirement I pan to cash shares from ESOP of 150k per year for the next 2.
In year 6 of retirement when we gain full access. I plan to buy a home in North Carolina. Part of the reason is their annuity guarantee of $300,000 unlike PA where we live now of only 100k.
We plan to take around give/take $3,000,000 of that money and purchase 10 300k Annuities from various AA and higher insurance companies for a fixed income to continue around $150k a year.
I then plan to take $1,000,000 and place it in a Vanguard Index fund of my choice at that time with optimistic intent of 5% or better return over its lifetime.
The remanning is $500,000 or so I plan to invest aggressively in a large cap domestic fund of my choice.
Beginning in the first year of retirement we plan to save 10% of any money withdrawn in whatever investment mechanism we decide.
The 10% savings per year is designed to offset eventual erosion of fixed income from lifetime annuities with inflation.
Projected income as follows...
Age (Wife) 56 - 61 = Min $150k
Age 62-70 = Min $150k Annuities with $50k Investments = 200k
Age 70 beyond Min $150k Annuities $50k Investments $60k Social Security=$260k per year
Suggestions on this scenario?
Will my long term goal of having $250+ available for end of life care be achieved using this model?
Will that be enough?
Thoughts?
John
My wife works for an iconic company (33 years) that is private and provides ESOP to their employees. They are a well known iconic company thats consistently retuned double digits over the years. Even during the worst market downturns their private stock has lost at most 1/2%. They are methodical and consistent with their expansion. They are also one of the largest landowners in the North East region with one of the best funded ESOPs in the country. They are consistent with little to no risk over the next 10 years of potential loss in their shares. They are the complete opposite of an Enron so please don't debate my logic in putting most of our eggs in their basket.
Conservate projections have them retuning as little as 12% per year over next 10 years to as much as 21% per year from past history, current management and future plans.
We plan to retire 5 years from now with the following projections.
Based on 6% market return over next 5 years we project having $500,000 in 401k
Based on 12% returns company quarterly dividends and distributions around $3,000,000 in 5 years. We are allowed to keep our ESOP for an additional 5 years after retirement. Projections are $4,500,000 in ESOP after 10 year period including selling of shares in years 9 and 10.
Please note that yes when ESOP math calculated years 6 to 10 my estimate is lower then projections assuming 12%, dividends and distributions. This is intentional as I plan for variations in estimates. Kinda plan for the worst hope for the best.
Combined my wife and I now earn $110,000 a year with expected salary increases of anywhere between 2.5-5% per year until we retire in 5.
We plan to wait until 70 to take social security and will be retiring at 56 and 53 years of age (Im younger)
We budgeted $24,000 a year for heath insurance
My main objective is to have at least 150% of our current income at the 10 year mark.
Objective 2 is to maintain this income through end of life to have best options for long term care facility if necessary. I want to be able to afford the best. So I don't want my money to last a specific date I want the income to be consistent through to end stage and beyond to ensure this.
We don't have kids so not concerned with leaving anything for airs.
The plan...
I love idea of fixed income for life without market risk so I love idea of Simple Lifetime annuities from AA- and better companies. They have been rising as of late and at are age we are close to 5% already if we bought in for guaranteed lifetime with 100% death benefit for spouse.
I want to secure lifetime of 150k Per year when we take full control of our ESOP in 10 years.
For the first 3 years of retirement I plan on spending down our 401ks at our $150k per year.
In year 4 and 5 of retirement I pan to cash shares from ESOP of 150k per year for the next 2.
In year 6 of retirement when we gain full access. I plan to buy a home in North Carolina. Part of the reason is their annuity guarantee of $300,000 unlike PA where we live now of only 100k.
We plan to take around give/take $3,000,000 of that money and purchase 10 300k Annuities from various AA and higher insurance companies for a fixed income to continue around $150k a year.
I then plan to take $1,000,000 and place it in a Vanguard Index fund of my choice at that time with optimistic intent of 5% or better return over its lifetime.
The remanning is $500,000 or so I plan to invest aggressively in a large cap domestic fund of my choice.
Beginning in the first year of retirement we plan to save 10% of any money withdrawn in whatever investment mechanism we decide.
The 10% savings per year is designed to offset eventual erosion of fixed income from lifetime annuities with inflation.
Projected income as follows...
Age (Wife) 56 - 61 = Min $150k
Age 62-70 = Min $150k Annuities with $50k Investments = 200k
Age 70 beyond Min $150k Annuities $50k Investments $60k Social Security=$260k per year
Suggestions on this scenario?
Will my long term goal of having $250+ available for end of life care be achieved using this model?
Will that be enough?
Thoughts?
John
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