2019 is the Goal

[Snoopy]

Any suggestions would be welcome:

I am 50 retire at 56 in 2019
DW 59 retire at 65 in 2018/2019
Income $200K…no debt, relatively secure employment

$1.1 million pre-tax divided as below (roughly...does include the $175k)
20% Vanguard Large Cap index
20% Vanguard Small Cap index
20% Vanguard Mid Cap index
20% Targeted 2035
20% targeted 2045
$175k company controlled with 6% return
Adding $57k annually through 2018
Yes we have some fund overlap

Pension $35k in 2019, no COLA, 100% survivor coverage
SS in 2018/2019 for DW $25k
SS in 2025 for me $18k (may delay for increased benefit)
Plan to set aside $300k for med emergencies, travel, large purchases

$130k retirement budget ($100k + 30% tax)…all estimates inflated 15 to 20%
Includes $18k medical insurance ($1.1k monthly thru employer)
Medical funds stay level to cover meds and Medicare plan B (?)
Travel, insurance, cars, HOA, utilities, gas, food, included
Could cut $20k or more from budget by reducing travel and misc.
Will likely cut some travel after 10 years of retirement

Shift some future savings to post tax?
Do we need to up savings?
Too much risk?
Will winning lottery mess up plans? Just kidding.

Any suggestions?

 

[jerome len]

Your 1.1 million is about 95 % stocks, I think. Somewhere in your planning I hope you are reducing risk. I'd look at one of the Vangard balanced index funds, adding bonds thereby diversifying your portfolio and reducing risk if we have a stock market sell off. Good luck.

 

[Midpack]

Welcome to ER.org. Have you tried FIRECalc: A different kind of retirement calculator yet? It might be a good place to start...

Here's what I get from FIRECALC if I assume your plan to age 95 (some consider it a good idea), but who knows if I entered your info as intended.

Your spending in every year after the first year will be adjusted for inflation, so the spending power is preserved.

Because you indicated a future retirement date (2019), the withdrawals won't start until that year. Your contributions will continue until then. The tested period is 7 years of preretirement plus 38 years of retirement, or 45 years.

FIRECalc looked at the 96 possible 45 year periods in the available data, starting with a portfolio of $1,100,000 and spending your specified amounts each year thereafter.

Here is how your portfolio would have fared in each of the 96 cycles. The lowest and highest portfolio balance throughout your retirement was $-2,112,409 to $33,348,320, with an average of $6,783,384. (Note: values are in terms of the dollars as of the beginning of the retirement period for each cycle.)

For our purposes, failure means the portfolio was depleted before the end of the 45 years. FIRECalc found that 6 cycles failed, for a success rate of 93.8%.

 

[Snoopy]

Thanks for the suggestions.

jerome len - That is a great suggestion. I'll look at moving some into a balanced index fund or similar lower risk investment. The $175k is a fixed return so it is pretty safe.

Midpack - thanks that is very helpful. Every time I run numbers through firecalc I waver on how many years to use. I am also surprised how much a small reduction in annual expenses impacts the long range projections. Just lowering expenses $10k to $15k annually really changes the outcomes.

 

[Quantum Sufficit]

Are you sure about 6% guaranteed in the portion with 175K? How do they do that without taking on some risk?

 

[Snoopy]

Yes, DW's employer does a match on 401k plus a percent into the seperate fund on which they set and ensure/fund the return. Contribution is based on years of service and works out to be a pretty good deal but not as good as a defined benefit pension.

Thanks for reviewing the original post and for your question. Any suggestions are welcome.