Would you retire @ 90% probability of success?

[daylatedollarshort]

The car budget is for gas, service and a $35k car every 5 years.

I don't buy clothes. That's my wife.

I think we could chop quite a bit out of that base budget, but that's what I use for planning because that is our current budget.

If you buy a $35K car every 5 years, does that include trade in value of your old car?

I don't think DH and I spend $500 on clothes a year, combined.

 

[Dtail]

If you buy a $35K car every 5 years, does that include trade in value of your old car?

I don't think DH and I spend $500 on clothes a year, combined.

Perhaps she will need less than 6k yearly in clothes in retirement, but happy wife happy life.

 

[corn18]

If you buy a $35K car every 5 years, does that include trade in value of your old car?

I don't think DH and I spend $500 on clothes a year, combined.

Net is $30k every 5 years.

 

[corn18]

Perhaps she will need less than 6k yearly in clothes in retirement, but happy wife happy life.

I agree. I haven't spent $500 a year on clothes, let alone every month.

 

[Gumby]

As others have noted, only you know where you can trim your budget to increase your odds of success and know what you would be willing and able to do in the face of a substantial multi-year bear market commencing the day after you retire. Some of us are more risk averse than others. So, for example, I held out for 200% (i.e. - double actual spending and still get 100%), but there are those who would tell me I wasted some years when I could have been retired. They are probably right. But I don't ever worry about money.

 

[Out-to-Lunch]

I have not made any effort to go through your numbers. However, it really surprises me to hear you say that a RIF of 12 weeks vs. 26 weeks has a material affect on your probability of success. Really? 5 mos. difference out of an entire working career? Seems surprising to me. I could be wrong (and likely am!), but if that is the case, it seems like you are sailing too close to the wind.

 

[2017ish]

We were at that point with our fully hoped for spend when we retired at 57/56 (no pensions, and assuming Zero social, so conservative estimate).

But, we had 50% of our proposed spending for travel. (which has been exceeded so far ). Thus, we figured that we could always slash multi-month international trips if needed.

Sounds like your discretionary is fairly large as well, so you should be good.

 

[Finance Dave]

Yeah, I think you are OK. Maybe take a part time job as they come available if suits you. Otherwise it seems you have plenty of slack to weather slim times.

I agree with this.

Also, depending on your profession, consider some consulting or opening your own business and limit your hours to something you are comfortable with.

I FIRE'd about 2 years ago, but have since taken on some light handyman work about 4-8 hours per week and I enjoy this.

 

[corn18]

I have not made any effort to go through your numbers. However, it really surprises me to hear you say that a RIF of 12 weeks vs. 26 weeks has a material affect on your probability of success. Really? 5 mos. difference out of an entire working career? Seems surprising to me. I could be wrong (and likely am!), but if that is the case, it seems like you are sailing too close to the wind.

$7k / week * 14 weeks = $98k. I re-ran the data and that gets me from 90% to 92%, not 95%.

 

[pb4uski]

Hearing rumors that a RIF might be coming. Talked to my big boss and confirmed. Also discussed packages and being part of the RIF. With a minimum severance of 12 weeks, I can retire with a 90% probability of success (Ps). Most likely severance would be 26 weeks, but who knows for sure. Ps would be 95% with the larger package. Will be 55. Annual budget is $145k all in with $33k of that being purely discretionary blow that dough type spending.

Would you retire @ 90% Ps?

Is the 90% based on $145k spending or on $112k of spending? If 90% is based on $145k, what would it be based on $112k?

 

[corn18]

Is the 90% based on $145k spending or on $112k of spending? If 90% is based on $145k, what would it be based on $112k?

90% is based on $145k. It's well over 100% if I use $112k.

 

[Rianne]

I have a COLA military pension of $49k. SS @ 70 will be $58k. $108k total @ age 70. I have free healthcare for me and my wife (Tricare) until age 65, then I go on Medicare and get a free supplement from Tricare. Lots of life insurance until age 78. I am 60/40 with 25% international.

I have been hoping I could retire @ 55 but needed a package to do it. Now that that might be possible, I would love to move on. I am a VP of business development in the defense world with a top secret clearance so if I wanted to work, I could easily find another job. I'd rather be a pet sitter and work at Ace Hardware.

My bold, that in itself is a done deal for me. Also sounds like you can find another job at your discretion. Work part-time, consult, contract out your skills. Why mess with stress when you have so many things going for you?

 

[pb4uski]

90% is based on $145k. It's well over 100% if I use $112k.

So well over 100% based on your "needs" and 90-95% based on "wants", depending on whether your employer offers 12 weeks or 26 weeks... I would jump.

Can the difference between 12 weeks @ 90% and 26 weeks @ 95% be right? I wouldn't think that adding 14 weeks of pay to the nestegg would move the success ratio that much.

 

[corn18]

So well over 100% based on your "needs" and 90-95% based on "wants", depending on whether your employer offers 12 weeks or 26 weeks... I would jump.

Can the difference between 12 weeks @ 90% and 26 weeks @ 95% be right? I wouldn't think that adding 14 weeks of pay to the nestegg would move the success ratio that much.

See above post. It only moves it 2%. At this point, knowing what is going on in the company, staying is not an option. The decision will be whether to look for another job, whether full time, part time or consulting.

 

[tb001]

90% is based on $145k. It's well over 100% if I use $112k.

What level of spend gets you to 95%? Are you confident in your budget and that discretionary spending being truly discretionary?

We essentially retired at 90%. I say essentially because we made decisions that would be career/income limiting based on that, but DH continues to consult part time.

We also have a fair amount of discretionary spend in our budget, along with sizable enough assets that we knew we had room to downsize if necessary.

With the market run up, we’re over 95% now and basic expenses are tracking under my initial budget, though we’ve been spending a lot on home projects that will hopefully start slowing down.

At a high level, it seems with your discretionary spend that you’re ok. My only issue would be how realistic is it that you cut some of the discretionary stuff. As others have said, a PT job can give you some extras and be a nice buffer. That’s how we’re thinking about DH’s work.

 

[corn18]

What level of spend gets you to 95%? Are you confident in your budget and that discretionary spending being truly discretionary?

We essentially retired at 90%. I say essentially because we made decisions that would be career/income limiting based on that, but DH continues to consult part time.

We also have a fair amount of discretionary spend in our budget, along with sizable enough assets that we knew we had room to downsize if necessary.

With the market run up, we’re over 95% now and basic expenses are tracking under my initial budget, though we’ve been spending a lot on home projects that will hopefully start slowing down.

At a high level, it seems with your discretionary spend that you’re ok. My only issue would be how realistic is it that you cut some of the discretionary stuff. As others have said, a PT job can give you some extras and be a nice buffer. That’s how we’re thinking about DH’s work.

We've been living by the base budget for 2 years now. Except for 2 sick pets that are now gone , we've stuck to it. So I am very confident in the base budget (and think it is fat, but we're a team, so it stays fat).

 

[Franklin]

90% is based on $145k. It's well over 100% if I use $112k.

Corn, you seem to be OK to me. If you are at 100% on your real spending then no worries. Your fatter budget is what is getting you below 95% and you will find that you can adjust downward annually based upon the markets returns. BTY, I also think your budget sounds logical. My DW spends far more on cloths etc.

 

[rodi]

If I were in your shoes I would not be worried about the RIF and would consider myself retired, or semi-retired if it comes.

As long as you're willing to pull in the spending during a downturn, you should be fine.

I, personally, wanted 100% before I pulled the plug... But I'm a belts and suspenders kind of gal. Overall, we've been spending less than originally budgeted.... without trying hard (but not spending like crazy, either.) I've been fortunate since retirement because of market gains - so now it's better than 100%.

Would you be willing to get a part time job and/or cut spending if there are down market years early in the retirement? Look up sequence of returns risk (SORR) to understand this is the riskiest part.

But you are close enough... you can probably make this work.

 

[brett]

I would take the RIF. Unless you really do enjoy your job AND if you believe that another package may be on the table next year. Not just based on the 90 percent, but on your pension income and your health care status.

 

[flyingaway]

Optional retirement is a choice with multiple objectives. How bad is your job? How desperately do you want to do retirement things?
If my retirement budget were $145k a year , I would retire normally with 90% success rate, because I could have 100% success rate if I would choose to live on $130k a year, which would still check all my boxes.
On the other hand, I'm not fully retired, because my job is very easy.

 

[pb4uski]

I think you are good to go.

Could you take 6-12 months off and then take on a part-time role somewhere if you decided that you wanted to keep working?

 

[corn18]

If I were in your shoes I would not be worried about the RIF and would consider myself retired, or semi-retired if it comes.

As long as you're willing to pull in the spending during a downturn, you should be fine.

I, personally, wanted 100% before I pulled the plug... But I'm a belts and suspenders kind of gal. Overall, we've been spending less than originally budgeted.... without trying hard (but not spending like crazy, either.) I've been fortunate since retirement because of market gains - so now it's better than 100%.

Would you be willing to get a part time job and/or cut spending if there are down market years early in the retirement? Look up sequence of returns risk (SORR) to understand this is the riskiest part.

But you are close enough... you can probably make this work.

I am definitely willing to get a part time job, and consider that likely after a year off. We are definitely willing to cut spending in down years. SORR is a beast, and we will keep an eye on that. The other issue we look at is survivor benefits. My pension is 55% and my SS is 50% survivor, so I needed to make sure that was accounted for when I die. I have laddered term life ins out to age 78 which keeps her in good shape. Also have a term policy on her, but I spend a lot less than she does.

We have made big purchases over the last 18 months in prep for retirement. Two new cars, new house, new camper. Built up a bond tent, so we're at 50/50 vs 60/40 right now. Will let that go back up to 60/40 as we spend cash/fixed income. While I feel I have accounted for everything, it's the bullet you don't see that will kill you.

 

[Cassius King]

If you don't take the RIF, what are the chances you're let go with nothing to show not too soon after?
In this situation I would take the RIF. That's not a company I would want to stick around at any longer.
I'd either take the leap at 90%, or adjust my spending to get to 100%. Best of luck.

Cheers!

 

[corn18]

If you don't take the RIF, what are the chances you're let go with nothing to show not too soon after?
In this situation I would take the RIF. That's not a company I would want to stick around at any longer.
I'd either take the leap at 90%, or adjust my spending to get to 100%. Best of luck.

Cheers!

Unknown. The risk is my RSU's. If I get RIFd before 1 Jul 2021, it triggers vesting of $200k of RSUs. After that, I have to wait until Mar 2022 to get them.

 

[USGrant1962]

Corn, I think you are all set. I too was a BD VP in government contracting. While I was 100% in FC, I planned to do some consulting just to stay engaged. I targeted 1/4-1/3 time, but industry people who heard I was consulting contacted me and shoved retainers in my face. So I'm almost 1/2 time, but that is equivalent to 1/3 time in MegaCorp - and almost all from home even before Covid.

Really the only reason I stayed full time at mega as long as I did was to meet the Rule of 55 and have my 401(k) as a backup funding source from age 55 through 59.5.

At your level you must know all of your industry BD heads, all the major consultants, all the contract proposal shops in your business line. It should be easy for you to find consulting work at whatever level you are comfortable, and at a pretty good hourly/day rate.