Poke holes in my plan (Please)

[Time2]

The smarter way is for the higher income person (largest SS at 62) to wait until age 70 to claim it.
That way the survivor will get the larger SS after the other one dies, regardless of who dies first.

That was my thinking, I did an 8% increase for 7 years x $1800 and got a little over $3,000. He can check that on his SS statement.

 

[Koolau]

No matter how good the plan - and yours sounds pretty good - one should always plan some back ups such as: Cutting expenses, moving to lower COL area, gig w*rk, etc. Probably won't need the back-ups, but if you are comfortable with making them work if worse comes to worst, it should set your mind at ease. YMMV

 

[ivinsfan]

You nailed it, pb4uski! Quite frankly with 500K NET in hand after selling our second home, we can easily live on it from 52 to 59 1/2. We wouldn't touch our 401K/457B/Roth's etc. No need. We are fairly frugal and know our expenses well.

The $2.3M wad would grow up to $3.4M at age 60, plus SS and inheritance. Again, not really counting on either for now plus what inheritance we'd like to leave behind.

What made you pick the 500K net number to be good in 4 years? Since it's a second home you won't be getting a capital gains exclusion.


Since you most likely will be getting SS money and inheritance it won't be a deal breaker but it certainly could affect the cost of your HI.

 

[Fermion]

I think you would be fine. We have a good bit less than that at our current age of 52 (retired at 45, dang has it been that long?) and I am not really concerned as long as inflation doesn't go to 20% for many years. I am not that concerned with that either though because it would be the end of the country as we know it and everyone would probably be moved to some sort of basic (ie, The Expanse)

We can control our spending to much less than $80k though. Cutting back, we can easily spend just $40k per year and still snowmobile, eat out, go sailing (at least on the little sailboat). The lower your yearly spend the more freebies you qualify for too.

 

[pb4uski]

The smarter way is for the higher income person (largest SS at 62) to wait until age 70 to claim it.
That way the survivor will get the larger SS after the other one dies, regardless of who dies first.

+1 Since given our ages and health status it is likely than one or the other of us will live until our early to mid 90s, as an averages player it makes sense for me (the higher earner) to wait until 70 so we'll likely collect that higher check for 20+ years.

For people with FRA of 67, age 62 benefit will be 70% of PIA and age 70 benefit will be 124% of PIA... so age 70 benefit is 77% higher than age 62 benefit. That's a huge difference.

 

[ncbill]

I wouldn't count too heavily on the inheritance for these possible reasons:

• It won't show up until the couple is dead, could be 20 yrs.
• Nursing home expenses of some years are very expensive.
• They may give it away in a Will to some Charity
• One may get remarried and the spouse gets it all and then Will's it away to "his/her family"
• Other siblings/relatives dramatically cut the amount for each.

Yep, happened to me.

One parent always swore that their estate would be split 3-ways (me, sibling, new spouse) but after death my sibling & I found out the spouse got half.

 

[badatmath]

Someone in my family remarried at 70 and he cut the kids out of his will. New spouse got it all.

 

[Koolau]

Also, even assuming the use of 72(t) withdrawals, 4% is likely too high a draw rate starting at 52--and a possible 40 year retirement.

The rules for a 72(t) are rigid and it could well be that the withdrawal rate would be higher than 4%. But nothing says the money withdrawn has to be spent. Some of it can be reinvested into a taxable account. YMMV

 

[ychuck46]

4% is too high

Also, even assuming the use of 72(t) withdrawals, 4% is likely too high a draw rate starting at 52--and a possible 40 year retirement.

Would definitely agree. I am not comfortable with 4% at 68 years of age; I prefer to keep ours at 2+%, which still affords us a great lifestyle since we have no debt.

 

[Koolau]

Would definitely agree. I am not comfortable with 4% at 68 years of age; I prefer to keep ours at 2+%, which still affords us a great lifestyle since we have no debt.

Heh, heh, at 75, I'm not comfortable with 4% - nor do I need to.

But what you find about using FIRECalc is that even if 4% is "too much" what happens is your % success goes down. So instead of (maybe) 96% chance of success, you get (maybe) 91% chance of success. You don't suddenly go from "okay" to "disaster." A prudent person will cut back during "bad" times and not continue to spend at the same rate when the markets drop 50%. YMMV

 

[ychuck46]

Heh, heh, at 75, I'm not comfortable with 4% - nor do I need to.

But what you find about using FIRECalc is that even if 4% is "too much" what happens is your % success goes down. So instead of (maybe) 96% chance of success, you get (maybe) 91% chance of success. You don't suddenly go from "okay" to "disaster." A prudent person will cut back during "bad" times and not continue to spend at the same rate when the markets drop 50%. YMMV

Absolutely. But I have always been conservative about our spending so I always wanted FIREcalc or any of its competitors to be at 99-100% on their projections, even taking it out to 95 years of age. That way when the unexpected expenses like a replacement vehicle or a new roof come along, they don't upset our plans. And as I said, the wife and I have a great life so we aren't sure we need to spend more anyways. Best wishes to you and yours in HI.

 

[youbet]

Ya just can't be too conservative!

1. Figure your expenses generously. Add amounts to cover "what if's" such as Medicare and ACA going broke and you're on your own for health care. Multiply all this by three.

2. Assume any SS or pensions turn out to be zero since the gov't or your private employer will not be able to pay them.

3. Assume high inflation and low market returns throughout your retirement. To hell with historical data defining the boundaries.

4. Add in contingencies for unplanned retirement funding killers like divorce, huge uninsured legal settlements against you, etc.

5. Assume you'll live to 125.

6. If you're in the "we've already won the game" camp, divide your success rate by 3. Divide by 6 if an "advisor" told you you've already won the game.

7. Other stuff?

Be diligent in assuring your plans can cover most anything. After all, we've got an infinite amount of time to enjoy FIRE so no point rushing into it without a very conservative plan!

 

[USGrant1962]

Ya just can't be too conservative!

1. Figure your expenses generously. Add amounts to cover "what if's" such as Medicare and ACA going broke and you're on your own for health care. Multiply all this by three.

2. Assume any SS or pensions turn out to be zero since the gov't or your private employer will not be able to pay them.

3. Assume high inflation and low market returns throughout your retirement. To hell with historical data defining the boundaries.

4. Add in contingencies for unplanned retirement funding killers like divorce, huge uninsured legal settlements against you, etc.

5. Assume you'll live to 125.

6. If you're in the "we've already won the game" camp, divide your success rate by 3. Divide by 6 if an "advisor" told you you've already won the game.

7. Other stuff?

Be diligent in assuring your plans can cover most anything. After all, we've got an infinite amount of time to enjoy FIRE so no point rushing into it without a very conservative plan!

 

[futuretrust]

Sorry late to the party here, but I am currently in year 4 after retiring at 52 with very similar #'s to what you are anticipating. It has been wonderful and I certainly think you can pull this off (obviously).

You asked to poke holes, so I would ask about your assumed returns to get you to that 2.3M. I like to do worst case scenarios on returns, but of course, it makes a big difference how it's invested. Depending on that, maybe, run firecalc with values 10,20 and 30% lower than that.

Also, on the expense side, I would say it is very possible that your 80K will be 100K in 4 years due to inflation in our current mess. I get the SS is gravy approach, however if you really want to do this, I would turn the SS into mashed potatoes (steak?. If SS goes away we will all have bigger problems than we could imagine. If you want to be conservative reduce the SS NPV by 20%.

Of course, you don't have to decide today. Personally, I think with your current assumptions it's an easy decision, but worst case it might be a little tougher. You've got time to think about it and you could always work a few extra years if need be. Good luck and congrats on getting to this position, well done!