Please critique my retirement plan

[pb4uski]

I think your plan makes sense with one little exception.... your are essentially using a 4% WR at age 55, not age 70.... probably not a huge deal, but I think a WR a little south of 4% would be preferable at age 55.

Also, you are assuming that the $798k side fund will grow at inflation so the withdrawals can be increased with inflation but that is probably not a hugely bad assumption.

If I input into FIRECalc and solve for spending at the 95% success rate, I get ~$133k... which is the same as your plan but using a 3.5% WR rather than 4% due to the 10 year early start.

 

[corn18]

I think your plan makes sense with one little exception.... your are essentially using a 4% WR at age 55, not age 70.... probably not a huge deal, but I think a WR a little south of 4% would be preferable at age 55.

Also, you are assuming that the $798k side fund will grow at inflation so the withdrawals can be increased with inflation but that is probably not a hugely bad assumption.

If I input into FIRECalc and solve for spending at the 95% success rate, I get ~$133k... which is the same as your plan but using a 3.5% WR rather than 4% due to the 10 year early start.

I agree completely with your thoughts. 4% WR starting @ 55 is on the aggressive side.

At $1k/day I would hope you had a blast. Were you literally burning rocket fuel?

That made me giggle. I told my wife when we got back that she should write a book on how to scrimp by on $1k a day in Europe.

 

[Crewer]

First class airfare can help spend that $1k/day if the trip isn't very long.

 

[bevette]

Why do you have life insurance? Just curious, since it appears your home is paid off.

 

[corn18]

Why do you have life insurance? Just curious, since it appears your home is paid off.

I am not FI yet and my life insurance insures that my wife will be FI if I die. And we are carrying a mortgage right now, so it helps with that.

 

[Philliefan33]

Your estimate for SS seems a little high, unless that is the total for both spouses. If so, have you accounted for that total decreasing when one of you dies?

 

[corn18]

Your estimate for SS seems a little high, unless that is the total for both spouses. If so, have you accounted for that total decreasing when one of you dies?

You are correct that the SS number is for both people. My wife has no earnings record, so that is my benefit @ age 70 and her spousal benefit.

The life insurance is there to help cover the pension going down to 55% and losing $15k of SS benefits if I die first. The ladder is in place until age 78. One question I was asked on bogleheads was what happens @ age 79? Haven't figured that one out yet. Maybe I can assume she will be old and frail and not spend as much.

 

[Souschef]

You are correct that the SS number is for both people. My wife has no earnings record, so that is my benefit @ age 70 and her spousal benefit.

The life insurance is there to help cover the pension going down to 55% and losing $15k of SS benefits if I die first. The ladder is in place until age 78. One question I was asked on bogleheads was what happens @ age 79? Haven't figured that one out yet. Maybe I can assume she will be old and frail and not spend as much.

80 is the new 70. i just joined the United Flying Octogenarians. We have male and female members all over the country.. We have 2 cruises booked, one for this year, and one for next April.
I just saw a segment on CBS Sunday Morning featuring Petula Clark, who is touring at the age of 85!

 

[2Moutal]

Corn18, your plan looks pretty good. I left full time work 2 years ago at age 61 and am pleasantly surprised how it is easier when you plan, so you are off to a good start.

Your plan is Plan A, you need to consider black swan events like a war, or big market swoon or unexpected death. So in other words have a Plan B and Plan C.

I don't know if your SS numbers are guaranteed considering all the talk about it providing fewer benefits to younger folks.

Al

 

[corn18]

Corn18, your plan looks pretty good. I left full time work 2 years ago at age 61 and am pleasantly surprised how it is easier when you plan, so you are off to a good start.

Your plan is Plan A, you need to consider black swan events like a war, or big market swoon or unexpected death. So in other words have a Plan B and Plan C.

I don't know if your SS numbers are guaranteed considering all the talk about it providing fewer benefits to younger folks.

Al

Al,

Based on feedback, I have set up black swan events (25% hit to SS, 40% drop in equities the year of retirement). I also added what if's on income for the next 3 years. And added OMY to my plan, although that is plan D. I have a range of annual income @ age 55. When the time comes, I will have more clarity and can decide if I have enough or not.

$115k = 25% hit to SS, 40% hit to equities the year of retirement, no bonuses and 0% nominal return between now and retirement

$157k = best case: 4% real return between now and retirement, no bear market, no hit to SS, full bonuses

The answer likely lies somewhere in between these two numbers. OMY at my high savings rate really reduces a lot of risk.

There is also a 7 figure inheritance somewhere in the future, but that is not in the plan.

 

[RetireBy90]

I think on the face of it your plan looks good, and from your responses it seems your down with cutting expenses when necessary.

I would suggest a little non-finance planning, what do you plan to do after first year of retirement to keep yourself busy? I’m thinking your 2 children are still at home, what about when they move out and have separate lives? Have a discussion with spouse about what you each see as lifestyle in retirement.

 

[pc95]

I'm not retired yet, but I have a few snap judgements on your budget that follows :

"
BUDGET Monthly Annual
AUTO FUEL 150 1,800.00
AUTO SERVICE 75 900.00
CLOTHES 300 3,600.00
DOGS / CATS 200 2,400.00
FOOD 700 8,400.00
DINING 700 8,400.00
HEALTH / BEAUTY 300 3,600.00
HOUSE MAINT 250 3,000.00
ENTERTAINMENT 200 2,400.00
MEDICAL 500 6,000.00
LUMPY STUFF 365 4,376.00
MISC 750 9,000.00

TOT DISC 4,490 53,876

HOUSE Tax&Ins 767 9,204.00
LIFE INSURANCE 220 2,640.00
CELL PHONE 150 1,800.00
CABLE 141 1,692.00
ELECTRIC / GAS 150 1,795.80
WATER 110 1,320.00
INTERNET 64 762.24
AUTO INS 150 1,800.00

Get rid of cable (add netflix and/or HD OTA), downgrade your cell phone plan. $700 for dining-out per month? Cut that or repurpose some of it toward cooking. $750 for misc? Lumpy stuff $350? Clothes $300?

I think you can shave off $1000 off your monthly budget fairly easily - you'll hardly notice it. Are you in a city - if so, recommend your library for additional entertainment unless inconveniently located. Your taxes are going toward it anyway.

 

[rpguy4]

Brief comparisons:


I have been tracking our expenses now since 2007, and for just my wife and I (no kids, no pets), I went back and looked at a few of our expenses over time:


Groceries per year average = 8K-9K
Gasoline for 2 cars - per year average = 2K
Dining out - per year average = 1K
Utilities = Gas,Electric,Water,Cable,Internet - per year average = $6K

 

[Teacher Terry]

I think your plan looks good. Depending on your cost of living you can easily spend 75k/year. We spend 62/year not counting vacations which are usually a extra 10k. This is for 2 people. We now have the time and energy to go out so we do. During the warmer months locally there is a festival every weekend. We live in a medium cost of living. When I was recently in Kenosha my favorite drink was half of what it cost here.