49 and missing my goal of 50

[Live And Learn]

Spending alot of time being VERY serious about this .... instead of "can I' my mentality is now "how can I make sure this happens !".

I probably do have 10 - 12k too much budgeted between Medical, LTC and LTD insurance since DH's job does include an employer subsidized plan. So right there is another "cushion" I've built into the budget.

Today I will be gathering all my receipts and statements for a checkpoint into my spending and will see if some of the other expenses are overstated as well. I think I need to run a set of numbers "for fun" that has all the "contingencies / cushions" taken out of it just to see where I land. All of these planners are supposed to be nearly "worst case" so I'm coming to realize that my budget is "the worst of the worst" ....

wouldn't it be funny if I found I could actually spend a little more in "fun money" then my budget has ? Then again, I can't imagine how 4% SWR could possibly work over 40 years .....

I think I need to change my avatar to a picture of a scardy cat !

[Live And Learn]

Quote:

Originally Posted by lhamo Food costs seem very high to me for two people -- perhaps the greater time/energy you will have for shopping for bargains and cooking yourself will help you drop this figure significantly after you are retired. 4k for cars and 2k for pets also seems a bit on the high side to me, at least as an average annual expense.

Food is budgeted at $120/week based upon current spending. I currently base my menus off of sale items and stock up on sale items. I eat steak maybe 1x every 2 weeks. Would love to eat more fish - but its so expensive in the stores ! Retirement time will definitely include more fiishing time !!! Coupons could help a bit but I dont see all that much room.

Cars covers 2 cars (both fully paid for - one 11 years old, the other only 2, both purchased used) and includes $2k for insurance and $2k for maintenance.

Agree that the pets expense is high but my current dog is "special needs" and should live another 10 years. After that the costs will go down ... unless I get the "luck" of the straw again with my next rescue. For me life w/out a dog is just not the same, so its almost a non discretionary expense LOL

Quote:

Originally Posted by lhamo If you are really concerned about it, what difference would working 6mo or 12mo more make in your projections? You could still retire at 50 and 11.99 months and consider yourself "retired at 50" if that goal is really important to you.

I love it - thats true - I have 18 months until I turn 51. I have time to make this work or make a conscious decision that I'm putting this off because I WANT to , rather than HAVE to.

Pehaps knowing that I actually do have enough F-U money will make my current j*b tolerable until I can get Fido to tell me I have a 90% chance of my portfolio lasting to 90. FireCalc is already on my side !

I'd like to thank everyone that responded. I love this place !!!

[Koolau]

Live and Learn,

A couple of thoughts to consider:

In your retirement stash, have you considered the effect of taxes on your tax-deferred money? If most of your stash is deferred, the taxes could be a huge bite - especially since you will be living from your portfolio. Each time you cash out some deferred money, you might have Fed and State (perhaps city/county) tax to pay. I say this because I find this to be an issue with our finances. I have begun considering my deferred money as equal to 0.7X the nominal amount. In my case, that's a big difference as much of our stash is deferred. This is a bummer, I know, but needs to be considered.

On (perhaps) a brighter note, I picked up on your use of the term "Medical". If that means you live in California, I have the perfect solution for you (well, I'll let you decide if it's perfect). Simply check out 3 or 4 "low tax", low COL states (I think TX, FL, MS, etc.) would qualify. As a back-up, you could always move to a low (total) cost region and live like a queen on your stash. I'd wait until I saw a portfolio failure on the distant horizon, but at least you have that as a backup.

I had to laugh when clifp talked about the fallacy of his "plan B" - going back to w*rk. I have NO plan to go back to w*rk, but I do have a back up (which might also work for clifp). We could move from Hawaii to TX (etc.) and also live like kings. My 1100 SF place here would buy me three 2000 SF ranch-style homes in certain areas of the mainland. I would have to be in real portfolio distress to use this backup, but it IS available to me. Perhaps you are in a similar situation, back-up wise.

Good luck and YMMV.

[Live And Learn]

Thanks Koolau . Appreciate the feedback. We moved to FL (no state or local income tax) about 10 years ago. Homeowners insurance is ridiculous high, but not higher than the State Income tax we paid before. My 12K of income tax assumptions in my budget assumes I have 80k in taxable income .... another area where I'm probably over conservative

I'm still not understanding how a 4% SWR makes sense ... but ... I sure hope it does !!!

[REattempt]

You can take out the 1K for LTD.

Disability policies are an income replacement policy. If you RE and have no (or very little) earned income, the LTD policy will not pay out.

You can maintain a policy while you are on sabbatical or looking for work. After about 6 months or so, they expect you to cancel the policy and likely will not honor it if you have not had employment income (W2 or 1099) in the last year.

Ask me how I know Just my 2Cents. Call your insurance company for details.

As for the "by 50 thing," my goal was Fired by 45. I didn't make it. Took me to 46 1/2. Didn't make a bit of difference, amazing that it happened anyway. Now it's just a funny story that I missed it by a year and 1/2. Don't sweat it.

[Koolau]

Quote:

Originally Posted by Live And Learn I'm still not understanding how a 4% SWR makes sense ... but ... I sure hope it does !!!

If you are not comfortable with this concept, you need to research it and become comfortable IMO. If you can NOT get comfortable with it, you need to choose a different (lower) SWR. Personally, I could not routinely pull 4% from my stash. Full disclosure: I do not have a 60:40 or 75:25 AA which is the starting point for the 4% for 30 years SWR. By the way, at 50, you stand a good chance of living longer than 30 years (let's hope, right?).

Lots of good stuff on this forum re: the 4% rule, but you can also link to the original studies which led to it.

[Milton]

Quote:

Originally Posted by frequenttraveler Thus, I ask myself this: If I ER'd today, what is the worst that can happen? Seems like the worst that can happen is that you might have to work longer part-time than you wanted to, OR...worst case...have to rejoin the work force. Yes, that would be a tragedy, I agree...

The worst that could happen is that the o/p could need to rejoin the work force and be unable to do so: either because of unforeseen health issue (it happens), or - more likely - because she will be an older person who has been out of the workforce for some considerable time. Clip is quite correct.

For many people with well-paying jobs, taking early retirement is essentially a one-way decision, since they will have little if any opportunity to resume working at anywhere close to their previous income. That's not a reason to unnecessarily delay ER if one is indeed is FI, but it is something to take into account when weighing one's options.

[ronocnikral]

Quote:

Originally Posted by Koolau If you are not comfortable with this concept, you need to research it and become comfortable IMO. If you can NOT get comfortable with it, you need to choose a different (lower) SWR. Personally, I could not routinely pull 4% from my stash. Full disclosure: I do not have a 60:40 or 75:25 AA which is the starting point for the 4% for 30 years SWR. By the way, at 50, you stand a good chance of living longer than 30 years (let's hope, right?). Lots of good stuff on this forum re: the 4% rule, but you can also link to the original studies which led to it.

+1. What the OP is saying is kind of like jumping out of a plane without double checking that your chute is attached.

The OP may want to research "Bengen" "Trinity 4%" etc. Also, the latest crush of many around here (myself included) is Wade Pfau, who has been doing some good work. Here is an "alternative to the 4% study." Pertinent imo are table 2.3 and 2.3a.

Again, I think the OP will be OK, they just need to figure out how they tighten the belt if need be and what the budget looks like when they start cutting out of the "Wants."

[jclarksnakes]

You are seemingly insured against everything EXCEPT running out of money. Firecalc says you do have enough but you are worried that it may not be right. If you die or go into a LTC facility the insurance company will only give you more money to add to your stash but you will not be able to spend it all because you will be dead or stuck in that LTC facility and unable to go places and buy things. Either way you would probably just eventually die with a lot of money. The biggest risk that you face IMO is the possibility that overall inflation or inflation in specific sectors like food or energy will go crazy and eventually deplete your money. Instead of spending money for life and LTC insurance you could instead buy an annuity from an insurance company to insure that you do not run out of money. These products may or may not be a good idea. Lots of opinions about them on both sides here at ER forum. Any product that an insurance company sells they have thouroughly researched to make sure they will overall make money selling that product. However, an annuity might provide you with the guarantee that Firecalc and a typical AA in the market does not provide against running out of money. You would then be in a position of having to trust an insuance company instead of Firecalc. There are no guarantees in life. Perhaps annuitizing a portion of your assets and keeping the rest in the market would overall provide you with the best solution.

[PaddyMac]

Quote:

Originally Posted by Live And Learn Today I will be gathering all my receipts and statements for a checkpoint into my spending and will see if some of the other expenses are overstated as well.

How have you been tracking our expenses? Do you have it all on a computer program?

We've always had a budget-on-paper, but beginning last year I computerized our accounts. It's now very easy to see at a glance what all expenses are and it does show up some surprises. It also shows how many of the expenses are not negotiable - like gas and water etc. So to reduce expenses we have to cut only the discretionary stuff.

[Live And Learn]

Quote:

Originally Posted by Milton The worst that could happen is that the o/p could need to rejoin the work force and be unable to do so: either because of unforeseen health issue (it happens), or - more likely - because she will be an older person who has been out of the workforce for some considerable time. Clip is quite correct. For many people with well-paying jobs, taking early retirement is essentially a one-way decision, since they will have little if any opportunity to resume working at anywhere close to their previous income. That's not a reason to unnecessarily delay ER if one is indeed is FI, but it is something to take into account when weighing one's options.

Definitely a one way decision, which is why I hesitate and put so many "fudge factors" and contingencies in my analyses.

Posting here has been a HUGE help. I'm taking real steps to move this out of "fantasy" and into reality.

Thanks for all the info on the 4% rule. I'll be doing more reading. Perhaps I can comfortable with 4% for 40 years.

In the meantime I'm doing additional "what ifs" on collecting SS. I think I have some opportunity there by waiting until I'm 70 to collect (DH would collect at 62) which will bring MY SS to a number that I could actually live on if my portfolio were depleted.

[Live And Learn]

Quote:

Originally Posted by PaddyMac How have you been tracking our expenses? Do you have it all on a computer program? We've always had a budget-on-paper, but beginning last year I computerized our accounts. It's now very easy to see at a glance what all expenses are and it does show up some surprises. It also shows how many of the expenses are not negotiable - like gas and water etc. So to reduce expenses we have to cut only the discretionary stuff.

I use a detailed spreadsheet that I've kept going since 2009. Every few months I gather up my bank statements, credit card statements, and whatever receipts I've accumulated and enter them in. Takes a couple of hours a few times a year. I don't itemize "pocket money" unless its big, in which case I keep the receipt - my budget item is simply "cash" for most of it. I pay most things by credit card (which I pay off in full each month) so it makes it easy to enter.

When I did this in 2009 it was a HUGE eye opener. I entered my expenses from 2007 to 2009 and I was shocked at how much I spent, even tho everyone around me would call me "very frugal". I cut back ALOT, and that reduced level of spending is what my retirement budget is based upon, except for Health Insurance and Medical Expenses which are based upon Fido's recommended budget.

[Live And Learn]

Spent some time looking at the articles on SWR. From what I can tell the original Trinity study gives me an 85% success rate at a 4% WR with a 50/50 AA for a 40 yr retirement.

The revised study says a 50/50 "ish" AA has 95% sucess at a 3.3% WR and 90% success with a 3.7% WR.

Not happy about those numbers.

I also see that I have a 90% success rate for a 35 yr retirement at 4.0% WR. SO ... that means I could be portfolio depleted at 85 which wouldn't be the end of the world.

Conclusion: I have 18 months to figure this all out and decide if I'm ok taking the risks. During that time I can evalute how much ER at 52 would reduce my risk and perhaps even give me a little extra money for travel.

[Packman]

L&L, my DW and I are also in a very similar situation with you. The only difference is we are just a couple of years older (me 55, DW 53), and I ER'd last year. By virtue of your conservativeness, like me, I will bet that you could easily slash your budget, should you ever need to do that. And once you do it, it will be easy to stay there, if needed. There is more in life to make one happy than money.

Here is another thought to ponder. We also have no children. I just finished an extensive estate planning process, as I am a big 'planner'. Now I have a new conern about my ER - what if I spent my whole life saving for retirement and die before I can enjoy it? Then, if both spouses pass, where will the money go?

So take a chance, enjoy what you have worked so hard to obtain. By the way, so far, I am living on dividends and cap gains from only my taxable accounts - haven't touched principle, haven't touched tax deferred accounts. Good luck!

[Live And Learn]

Thanks Packman. And congrats on achieving your own goals ! I'm glad to hear all your planning and hard work has paid off. (PS: if you need an heir I'm happy to volunteer )

[aida2003]

Quote:

Originally Posted by Live And Learn Budget = 91k annually: 22 medical expenses (insurance premuim, deductables, medications) 12 income tax 7 LTC (assuming I can get it !) 6 Home Taxes / Insurance 6 Utilities / Cable / Cell Phones 5 Home Maintenance / HOA 6 Food cooked at home 2 Outside dining 7 "fun" money (hobbies, pocket money, etc) 4 Cars (insurance and maintenace, gas = "fun money") 1 LTD 2 Life Insurance 3 Vacation 2 "stuff" (mostly things that need to be replaced) 3 future one time expenses 2 Pets 1 Donations I've used 79k in firecalc assuming 12k in either earnings or SS. 12k is DH's current salary. SS even if we stopped working today would be 30k, so I've left myself an 18k buffer there. Current portfolio = 1.9mm (excluding real estate and 200k set aside for one time expenses for new roofs, new A/C, a couple of fantasy vacations, and the like) I feel like such a dork worrying when I have more than I could have EVER imagined. Thanks again

Some random thoughts after reading this thread and it was interesting, BTW.
Others already mentioned about the LTC insurance. Depending on the pre-existing conditions you might need it or maybe not. It sounds that you'd like to get it, but might not qualify for it. My suggestion would be to start investigating this portion of your plan, to see whether any finacially stable insurance co. would take you (both) and what premiums you might pay. Don't forget that those premiums are not set in stone either. After hearing many negatives about LTC, we'll try to self-insure, IMO.

I don't know what's the reason to pay for life insurance if nobody depends on you and your income. Are you sure you're not wasting $2k for it?

The same goes for LTD? Another $1k

When your 11 y.o. car dies, can you share one car? I'm pretty sure it's doable, but that's just me thinking. Less money to spend plus adds to your 'green' side (less pollution, less support to oil, etc.).

If needed, would you consider moving to another cheaper state? Boy, either your residence is in the flood area or the house is so grand, that you really pay A LOT for the house taxes/insurance/HOA's/maint/utilities,etc. Hopefully we'll never move there. Only hearing about hurricane seasons there scares me.

More in general... I read 'experts' advising potential retirees to live on the new budget (as if retired) for a while and see how it goes. But since you know LBYM, maybe you should try to live on the bare minimum budget that would be acceptable to you both, so you can test the worst case scenario.

Since we're far away from retirement or even 50, I don't study the 4% SWR yet, but in case the majority of your investments are in deferred ret. accounts, have you factored in implications of drawing them ealier than 59.5? The same 'experts' recommend to have 4-6 years of your retirement expenses in 'safe' accounts outside the retirement accounts.

Based on our spending, I could easily retire today on your portfolio (care to share ?), but we have to work FT, save, and raise our two little rascals.

Just one last note. We use our AmEx CC for probably 97% of our monthly expenses. Each Feb. (or maybe Jan., I cannot recall), AmEx generated a yearly report by categorizing our expenses. Not sure how they do it (by store names or whether they analyze my receipts too), but totals seem to reflect where our money goes quite accurately.

[Live And Learn]

Thanks Aida. I actually just found out that my employer is going to offer LTC insurance as part of benefits package. We will pay 100% but they are offering a one time evidence of insurability waiver. I'll find out what the proposed premiums are next month.

As for my taxes and insurance, they are CRAZY. Insurance here is just nuts (and scary). And the deductable is 3% of the house value !!! I think I'm actually overinsured at the moment so thats another area for me to explore.

On the home mainteance - that includes alarm system costs (50), exterimator (30), water bill (80), HOA (90), plus repairs. It adds up fast.

Not having a car during the day would make me feel trapped, so I dont plan for us to go down to one car until DH retires also (12 years from now).

Never managed to get around to reviewing my expenses for the past 12 months - did my taxes instead (OUCH !).

[YoungSaver]

Wow, how big is your house? Have you thought about downsizing or living somewhere without an HOA? Your house expenses are insane!

[Live And Learn]

Quote:

Originally Posted by YoungSaver Wow, how big is your house? Have you thought about downsizing or living somewhere without an HOA? Your house expenses are insane!

Unfortunately they are not all that insane when you look at the subcomponents

Quote:

Originally Posted by Live And Learn Thanks Aida. ... On the home mainteance - that includes alarm system costs (50), exterimator (30), water bill (80), HOA (90), plus repairs. It adds up fast.

[YoungSaver]

Quote:

Originally Posted by Live And Learn Unfortunately they are not all that insane when you look at the subcomponents

So have you thought about downsizing? I am a home owner myself.