Somewhat worried.

[ERD50]

Also, I didn't see any info on how your money is invested.

FIRECalc default is a 75/25 allocation between stocks and fixed income. Most here would recommend you use a no-load, low-fee, broad market index fund for each of those. VTI and BND are examples.

The exact % mix isn't so important, survival rates are pretty similar between ~ 35/65 and 95/5. I prefer to stay towards the middle of that range. If you are close to something like that, that's fine.

If you are paying an advisor, and getting hit with a 1% fee (and likely put into funds with higher expenses), then you'll need a lot more to retire. To get the same 3% withdrawal for you ($60K/year, 3% of $2M), and a 1% for the advisor means you need enough for you ($60K) plus that 1% for the FA ($20K). Instead of $2M, you'd need $2.67M. That's a lot of work (for you!) to come up with an extra $670,000 dollars.

-ERD50

 

[Koolau]

Also, I didn't see any info on how your money is invested.

FIRECalc default is a 75/25 allocation between stocks and fixed income. Most here would recommend you use a no-load, low-fee, broad market index fund for each of those. VTI and BND are examples.

The exact % mix isn't so important, survival rates are pretty similar between ~ 35/65 and 95/5. I prefer to stay towards the middle of that range. If you are close to something like that, that's fine.

If you are paying an advisor, and getting hit with a 1% fee (and likely put into funds with higher expenses), then you'll need a lot more to retire. To get the same 3% withdrawal for you ($60K/year, 3% of $2M), and a 1% for the advisor means you need enough for you ($60K) plus that 1% for the FA ($20K). Instead of $2M, you'd need $2.67M. That's a lot of work (for you!) to come up with an extra $670,000 dollars.

-ERD50

Excellent point. Even "good" advice probably won't get you enough extra vs just buying 2 or 3 low-cost indexes on your own. How far off could you be? Or even buying a single target-date fund (I don't really like them) probably wouldn't cost you as much as the 1% drag charged by an advisor. AND if s/he is wrong - guess who still gets paid and guess who takes the loss. YMMV

 

[StuckinCT]

You’re in good shape, the only other thing I might consider is a plan for long term care. You are close to being able to self insure. Also make sure your investment allocation in firecalc matches your actual allocation under the 3rd or 4th tab. I’d recommend at least 70% equity.

 

[SecondAttempt]

Firecalc is great. I have no argument with anything posted here.

But if you want real simplicity, $2 million in cash allows you to spend your $60,000 a year for 33+ years at which point you will be in your 90s. Maybe your health is great and you will live that long but the reality is that most people don't.

I'm pretty close to your age and have about 10% less than you. I am in good health but most of my family members have died in their 70s. So I'm pretty confident in my plan to retire in about 2.5 years.

I'm pretty savvy financially and have done my analysis in all kinds of ways including firecalc. But you may want to consider getting a second opinion from a (fee only) CFP if only to build your confidence.

 

[Major Tom]

But if you want real simplicity, $2 million in cash allows you to spend your $60,000 a year for 33+ years at which point you will be in your 90s. Maybe your health is great and you will live that long but the reality is that most people don't.

The only problem with that is that, if inflation over the next 33 years is anything like it was over the last 33 years, that $60,000 will only be worth around $26,000 in today's dollars after 33 years has passed. That is quite a pay cut.

 

[old medic]

\You and I have a lot in common... except I'm 2 years in front of you, 77 days to go. I'm Know were near the financial brains most in here, but you look in good shape to me. Keep playing with FireCalc and good luck.

 

[Koolau]

The only problem with that is that, if inflation over the next 33 years is anything like it was over the last 33 years, that $60,000 will only be worth around $26,000 in today's dollars after 33 years has passed. That is quite a pay cut.

SecondAttempt simply divided 2,000,000 by 60,000 and got 33 years of survival. But the good news is with an AA of 40/60 to perhaps 70/30 you can adjust every year for inflation according to FIRECalc. YMMV

 

[ERD50]

Firecalc is great. I have no argument with anything posted here.

But if you want real simplicity, $2 million in cash allows you to spend your $60,000 a year for 33+ years at which point you will be in your 90s. Maybe your health is great and you will live that long but the reality is that most people don't. ...

OK, true that "most people" who are age 60 don't reach age 90, but 33% of males of "average" health, non-smoker, and 44% of females do reach age 90.

And the odds of reaching 95 and even 100 are not insignificant. I plan on it, in case it happens, rather than be broke and in my 90's.

age|male|female
90 |33% |44%
95 |15% |23%
100 |5% |9%

www.longevityillustrator.org

-ERD50

 

[Choices]

Yes, It shows 1800/mo at age 62. I'm hoping to use that for health insurance once I hit 62. Gonna have to pay it myself from 59-62.

I am unsure why you will be on the hook for HI until age 62 only

 

[Koolau]

I am unsure why you will be on the hook for HI until age 62 only

I assumed JohnDevereaux was planning for his $1800 SS to cover his HI starting at 62. Money is fungible so I wouldn't think of it that way, but it IS one way to think of how to deal with the cost of HI. Obviously, YMMV.

 

[SecondAttempt]

The only problem with that is that, if inflation over the next 33 years is anything like it was over the last 33 years, that $60,000 will only be worth around $26,000 in today's dollars after 33 years has passed. That is quite a pay cut.

True. So keep the money in TIPS.

I'm not saying my "analysis" is better than firecalc or most other analyses. I just meant to provide a very simple way to look at the situation.

 

[Koolau]

True. So keep the money in TIPS.

I'm not saying my "analysis" is better than firecalc or most other analyses. I just meant to provide a very simple way to look at the situation.

No expert on TIPS but I think of them as a guaranteed loss (maybe they keep up with inflation, but you pay taxes on the gains - so a net loss.) NOT to say TIPS don't have their place in a portfolio. I just haven't found it yet in mine. I do have OLD I-bonds which paid actual interest PLUS inflation. Now THOSE would have been nice to have now. The current ones are like TIPS in that they are essentially paying "0" actual (and you pay taxes on the "gain") but of course, that's better than under the mattress or even a CD. So, YMMV.

 

[Out-to-Lunch]

No expert on TIPS but I think of them as a guaranteed loss (maybe they keep up with inflation, but you pay taxes on the gains - so a net loss.) NOT to say TIPS don't have their place in a portfolio. I just haven't found it yet in mine. I do have OLD I-bonds which paid actual interest PLUS inflation. Now THOSE would have been nice to have now. The current ones are like TIPS in that they are essentially paying "0" actual (and you pay taxes on the "gain") but of course, that's better than under the mattress or even a CD. So, YMMV.

All true. However, I am unaware of any marketable, safe security that does NOT have a guaranteed loss. Are you?

 

[geezee1957]

Look carefully into the ACA for health insurance until 65 when Medicare kicks in. Premiums are high but if you can keep your income low you get a good subsidy. It may help you to delay SS and not pay much for health insurance. You can go on the healthcare site and model different income levels and projected costs. Good job on your savings!

 

[Magus]

Two points- the 1.75m is really closer to 1.40m due to taxes you may have to pay. You may want to de-risk this close to pulling the trigger so your 1.4m doesn't become 700K in a nasty downturn in equites. I don't have a crystal ball, but it has happened before.

Make sure you have a cash cushion to help control income needed from the 401Ks in the early years. That would also help with ACA subsidies if needed for health insurance.

I'm wishing you the best and a great retirement.

VW

Married couple taking out 3%-4% withdraw on that kind of retirement account will not pay 20% effective tax rate...it'll be closer to 6%. Problem with "de-risking" in the current environment is your bonds and cash are massively risked to inflation at 6%+. Don't believe me? Run the value of bonds at YTM of 1% rising to 5%. Then subtract 6% for inflation.

 

[dixter]

hey... your target is $2 million... and you say you only need $50K/yr...

use a calculator on your iphone.... its pretty simple

$2,000,000/$50= 40 yrs of $50k

so all you need to do now is add up you and your wifes SS payments each yr and subtract that number from the $50K and use your calculator again...

guess what... you have more than enough money to last you until you both die ...

pretty simple plan.... takes about 5 minutes to figure out.... you most likely will need you and your wifes SS checks to pay for the taxes coming your way... but that still gives you $50K per yr tax free.... for at least 40 years.. now you just need to take that calculator one more time and add the age you plan on taking the money and add 40yrs to that and ask yourself and your wife.. do we plan on living past 102yrs... 62+40 = 102 see how I did that for ya... ha ha

 

[Magus]

OK, true that "most people" who are age 60 don't reach age 90, but 33% of males of "average" health, non-smoker, and 44% of females do reach age 90.

And the odds of reaching 95 and even 100 are not insignificant. I plan on it, in case it happens, rather than be broke and in my 90's.

age|male|female
90 |33% |44%
95 |15% |23%
100 |5% |9%

www.longevityillustrator.org

-ERD50

Very interesting link, thanks for sharing!

 

[OldShooter]

hey... your target is $2 million... and you say you only need $50K/yr...

use a calculator on your iphone.... its pretty simple

$2,000,000/$50= 40 yrs of $50k

so all you need to do now is add up you and your wifes SS payments each yr and subtract that number from the $50K and use your calculator again...

guess what... you have more than enough money to last you until you both die ...

pretty simple plan.... takes about 5 minutes to figure out.... you most likely will need you and your wifes SS checks to pay for the taxes coming your way... but that still gives you $50K per yr tax free.... for at least 40 years.. now you just need to take that calculator one more time and add the age you plan on taking the money and add 40yrs to that and ask yourself and your wife.. do we plan on living past 102yrs... 62+40 = 102 see how I did that for ya... ha ha

Well, err ... not exactly. H. L. Mencken told us many years ago: “For every complex problem, there is a solution that is simple, neat and wrong.” The fact that the purchasing power of today's $50K/year will likely erode to less than half is an important consideration that a level-loaded plan doesn't consider. That’s an important negative factor. The good news is that a well designed portfolio will yield income, ideally enough to at least mitigate inflation. That also has to be considered. Then there is the little matter of estimating social security given the unknown political and inflation environment. Lots of other factors, too, mostly unknown. Not simple.

The fact is that the OP may well have enough money, but an overly simple analysis is not of much help in finding out. That's why things like FireCalc are around.

 

[troutnut1]

The biggest problem I see is with your vehicles. With three of them under two years old, it won’t be long before your all of your auto warranties all expire at the same time. Our newest vehicle is 15 and they still call me every day…

 

[pb4uski]

Two points- the 1.75m is really closer to 1.40m due to taxes you may have to pay. ...

Married couple taking out 3%-4% withdraw on that kind of retirement account will not pay 20% effective tax rate...it'll be closer to 6%. ...

Yes, not even close to 20%.... $55k withdrawals for MFJ would only be 5.80% federal income tax and 2.44% LA tax for total of 8.24%.... $70k withdrawals for MFJ would only be 7.13% federal income tax and 2.77% LA tax for total of 9.90%

At that level of withdrawals they wouldn't even be close to 20% marginal rate, not to mention a 20% effective rate.

 

[I am He]

Remember that taxes are due on the IRA.
Keep in mind RMDs and taxes in particular if you should ever be widowed.

I think you're pretty good but planning for the unexpected adds to the equation.

Our group is split between those thinking enough is enough and the rest of us always worrying is it enough? Depending on the decade, I'm sure we're both right.

 

[SeanPizzle]

Are you getting an income from the paid for house with 10 acres next door? That could be a significant amount of cash to help. Even $1K a month is a lot. I agree with above about looking at ACA plans. If you keep your AGI down to 30 to 40K, I'm betting your net cost for silver plan is less than 800 a month.

 

[skyking1]

Since the OP is just finding the extra tabs on firecalc now, I won't even mention Roth conversions oh oops....

 

[dixter]

The fact that the purchasing power of today's $50K/year will likely erode to less than half is an important consideration that a level-loaded plan doesn't consider. That’s an important negative factor. Not simple.

And then the OP sells the house and 10 acres next door to a MJ farmer for another $1 million and lives happily ever after....

or they do like millions of other retired people and sell everything they own and buy a $500K motor home and live on the cheap for the rest of their lives...

its pretty simple...

can you imagine one of these days a topic comes here on ER...

" I had $2 million to retire on so I asked a question on ER what should I do as I only need $50K/yr and I took the advice and lost the whole thing and now living in a tent under the hyway "

 

[Koolau]

All true. However, I am unaware of any marketable, safe security that does NOT have a guaranteed loss. Are you?

Actually, no but I'm no expert. I wish there were something safe with a real (after tax) return. Maybe we just have to settle for "less loss" than cash under the mattress.