5 years to go..max!

[TickTock]

I’m wondering how to plan finances where we don’t feel strained financially between 50-60 and then be flush with more money than we need past age 60. How could I model this better?

FIRECalc can model this. Be prepared to spend some time learning the ins and outs of the program and run several scenarios.

Also take some time and try to get a better handle on your post-retirement expenses, especially as you intend to do extensive international travel. Not saying this will necessarily increase your expenses, but it is different that what you've been doing, so take that into account.

Run different scenarios at healthcare.gov (assuming you're not intending to get healthcare internationally; if you are, heavily research those options) to see how much you may pay in premiums, what your PTCs may be, and max OOP costs.

Go to socialsecurity.gov and plug in your expected future earnings numbers to get a better idea of SS benefits (assuming they won't be cut).

Finally, and somewhat controversially, read Die With Zero by Bill Perkins. Has a different perspective on spending. There's a 22-page (!) thread on this book: https://www.early-retirement.org/forums/f28/die-with-zero-book-109520-22.html

 

[NgineER]

Thanks for laying this out!
So in year 2029, would it look something like this?

1. Assume no earned income.
2. Do a Roth conversion from TIra, as your table states. Pay taxes as needed from my taxable account. Hopefully minimal given no earned income.
3. Utilize contributions from MBDR to fund my spending.
4. Don’t spend too much from my taxable accounts.

Rinse/repeat for next four years, after which I can access the first tranche that I converted in 2029.

Spot on!

You should continue the conversion beyond the 2034 date to further even out the balance between Roth and traditional, but doing the above would get you to the point where you have penalty free access to your retirement accounts.

 

[RetiredHappy]

You should double check this estimate. I am not an expert by any means, but I think SS payout is based on your top 35 years. Your SS estimate may be based on you continuing to earn what you did last year until age 67. If you retire, there will be zeros on the list of top 35 years. That will decrease your payout.

I agree that OP needs to use a SS tool to figure out what is the exact payout based on stopping work after 23 years and wife after 20. Or maybe OP is thinking 23 + 5 more years and wife at 20 + 5 more years.

On the other hand, I think OP's numbers are pretty close. I have put 18 years into SS, with 14 years at maximum and I am going to get $1850 per month at age 62. The SS estimates for me at 70 years is $3,300 per month

 

[FedRetired50]

You should double check this estimate. I am not an expert by any means, but I think SS payout is based on your top 35 years. Your SS estimate may be based on you continuing to earn what you did last year until age 67. If you retire, there will be zeros on the list of top 35 years. That will decrease your payout.

Correct, your top-35 years are used, so even with many high-earning years, if you also have a lot of zero years that will drag the benefit down. Log into ssa.gov and you can get an estimate of your benefit including telling it to assume zero dollars of income for future years. Although I found it didn't change my own benefit estimate by much - but I also don't have any zero income years and low income years are weighted higher.

 

[SF94111]

Bay Area equity

Another Bay Area couple here (both 46) - difference with us is that we don't have kids... so a bit more selfish than you (and less worry on school costs).

Curious - what's your long-term plan for your Bay Area house? You noted no debt...

We have a 2.1mm house (per Zillow) and currently owe roughly 230K.

 

[2029FIREaway]

You should double check this estimate. I am not an expert by any means, but I think SS payout is based on your top 35 years. Your SS estimate may be based on you continuing to earn what you did last year until age 67. If you retire, there will be zeros on the list of top 35 years. That will decrease your payout.

Yep, I do need to double check. But I’m pretty sure I’m being conservative with my estimates given we’ll be working for another 5 years.

 

[2029FIREaway]

FIRECalc can model this. Be prepared to spend some time learning the ins and outs of the program and run several scenarios.

Also take some time and try to get a better handle on your post-retirement expenses, especially as you intend to do extensive international travel. Not saying this will necessarily increase your expenses, but it is different that what you've been doing, so take that into account.

Run different scenarios at healthcare.gov (assuming you're not intending to get healthcare internationally; if you are, heavily research those options) to see how much you may pay in premiums, what your PTCs may be, and max OOP costs.

Go to socialsecurity.gov and plug in your expected future earnings numbers to get a better idea of SS benefits (assuming they won't be cut).

Finally, and somewhat controversially, read Die With Zero by Bill Perkins. Has a different perspective on spending. There's a 22-page (!) thread on this book: https://www.early-retirement.org/forums/f28/die-with-zero-book-109520-22.html

I really like the Die with Zero book. I’m a fan of the concept.
Love the quote you mention above too.

The book reaffirmed my ER goals. My father getting sick and passing away before age 60 just rubber stamps the why. I know I don’t have to sell that much on this forum

I will play seriously with FIRECalc as you mention including all expenses, travel, health etc.

Honestly I’ve never been a detailed tracker. As long as the big picture looks good, I’m good. I’ve been telling the wife once we pass $4M it will be a huge relief. Over $4.5M and I’ll probably be wasting my hours at work vs doing other things. We all need to figure out how to evaluate time better imo.

One thing we’ve been good at is enjoying the journey. Sometimes a bit too much! But , ce la vie. Gotta enjoy the $ on things we enjoy right now!

 

[2029FIREaway]

Spot on!

You should continue the conversion beyond the 2034 date to further even out the balance between Roth and traditional, but doing the above would get you to the point where you have penalty free access to your retirement accounts.

Thanks for the validation NginER. You and everyone here is awesome!

 

[2029FIREaway]

Another Bay Area couple here (both 46) - difference with us is that we don't have kids... so a bit more selfish than you (and less worry on school costs).

Curious - what's your long-term plan for your Bay Area house? You noted no debt...

We have a 2.1mm house (per Zillow) and currently owe roughly 230K.

We’ve thought hard about this. Given family in the area we will not sell soon.
We like our area in general. Longer term, if the kids are not in the area/not using the house and neither are we, we could sell. Very unlikely though imo.

It’s going to be our home base.

 

[zekeboz]

Thank you!
I will look at both of those calculators. Is there one that tops your list?
I am both lazy and cheap, but willing to spend some $ on a tool like this.

SS: good question. I’ve worked 23 years at or close to max SS earnings. Wife similar at 20 years. My basic (underestimate) assumption is 2k for her a month starting age 62. $4k a month for me starting age 70.

Is it only Tuesday? I’m so done with early work calls!!

I would suggest newretirement since i found modeling of Roth conversions a little easier.

For kicks I entered your numbers from the 1st post and to keep it simple excluded college/529s, and assumed just one conservative SS benefit at 30k / year starting at 70, an overall 3% inflation rate, and a 'smile' expense forecast (higher at the beginning and end of life based on the $150k mentioned). The plan produced a 96% success if you were to retire now (no additional W2 income). That number would improve if you added another SS, pension, working in retirement or had lower expenses. In short you are in a very good position. (Context wise anything over 90% supposedly is good to retire with assuming you are willing to be dynamic in your spending).

Take the above with a grain of salt but the purpose of the quick example is to highlight the same issue I encountered on when I 'could' retire and it wasn't until after hiring some expensive reviews with Planners that basically slapped me in the face to say that yes, the numbers don't lie and you are 'ready'. Emotionally ready though has been another issue at least for me... ;-) I wish I had taken my results from these calculators little more seriously since it would have bought me at least a couple years of planning, think portfolio make up, build up after tax cash account for the gap years and Roth Conversions.

Note - for an accurate SS estimate use the SS gov site. Their online tools are based on the numbers the gov. already has and you can model an early retirement by just stating 0 for additional earnings.

 

[FedRetired50]

Context wise anything over 90% supposedly is good to retire

I've seen others here state that 80%+ is good to go.

 

[zekeboz]

I've seen others here state that 80%+ is good to go.

Yeah, the Planners that we hired to review our numbers stated anything over 85% was considered ‘good enough’. Personally I am closer to 97%+ for comfort.

 

[Wile E. Coyote]

Yep, I do need to double check. But I’m pretty sure I’m being conservative with my estimates given we’ll be working for another 5 years.

Inside the SS account you can click around and find where to estimate future years. You could add in the future 0 years and it will run the estimate.

 

[Wile E. Coyote]

401K's from the company you retire from are tappable penalty free at 55, not 59 1/2. And if you have other 401Ks out there it's possible you can transfer them to your current 401K before then.

It might be prudent to just work to 55. It is another 5 for SS and another 5 years of savings and gets the kids through college with any unexpected expenses, etc. But, they have time to make that determination as things move along. 55 still very young to retire. One of my friends are 77 and 80 and still traveling all over the world. So, they'd still have 20 years to travel.

 

[2029FIREaway]

It might be prudent to just work to 55. It is another 5 for SS and another 5 years of savings and gets the kids through college with any unexpected expenses, etc. But, they have time to make that determination as things move along. 55 still very young to retire. One of my friends are 77 and 80 and still traveling all over the world. So, they'd still have 20 years to travel.

55 sounds a long time away. I’ll be 46 this year.
I consider myself home bound right now with two school age kids.
I feel like it will be like summer break/true freedom once both kids are out of grade school. I’d rather have 100% of my time, bumming around at home, traveling etc.

It’s truly a dream to aim for age 50/51 but imagine the opportunity cost in healthy years if I keep doing OMY. This may occur, who knows.

Man plans. God Laughs.

 

[FedRetired50]

I feel like it will be like summer break/true freedom once both kids are out of grade school.

I couldn't wait for my youngest to graduate high school. I spent 39 of my 48 years (48 as of when she was to graduate) governed by the school calendar, first my own years in school, then my ex was a school teacher, then our kids.

Excluding perks like no more back-to-school nights or after-school pickups from various clubs, I'd be able to schedule a vacation in mid-October just because! Or I could escape in late January when it is the coldest! Then covid hit 2 months before she graduated. Happily in the last 2 years my girlfriend and I have more than made up for it.

 

[Wile E. Coyote]

55 sounds a long time away. I’ll be 46 this year.
I consider myself home bound right now with two school age kids.
I feel like it will be like summer break/true freedom once both kids are out of grade school. I’d rather have 100% of my time, bumming around at home, traveling etc.

It’s truly a dream to aim for age 50/51 but imagine the opportunity cost in healthy years if I keep doing OMY. This may occur, who knows.

Man plans. God Laughs.

I agree it is better to plan for 5 years at 50/51.

However, once you get there you may feel differently because you will have a different perspective. We have people at work who used to say the minute they were eligible to retire they would be gone and 5-7 years later they are still working (people with millions in their 401k).

Important to continue to reevaluate and allow yourself the flexibility to change your mind. I guess what I learned from those people announcing their retirement one year, the next year and it goes on until they finally realize they better stop announcing it. I learned don't announce it.

 

[Surewhitey]

55 sounds a long time away. I’ll be 46 this year.
I consider myself home bound right now with two school age kids.
I feel like it will be like summer break/true freedom once both kids are out of grade school. I’d rather have 100% of my time, bumming around at home, traveling etc.

It’s truly a dream to aim for age 50/51 but imagine the opportunity cost in healthy years if I keep doing OMY. This may occur, who knows.

Man plans. God Laughs.

Definitely agree, DW doesn't. However, she just went to 4 day w*rk week and is now banking 80-ish days / yr (including PTO & sick pay). Maybe consider a glide into retirement and taste a little before FT retirement?

DD college / married off in 08 & we've been gypsies ever since, living off & on in CA, TX & Mexico. So kids out of the house is a great thing.

 

[2029FIREaway]

I couldn't wait for my youngest to graduate high school. I spent 39 of my 48 years (48 as of when she was to graduate) governed by the school calendar, first my own years in school, then my ex was a school teacher, then our kids.

Excluding perks like no more back-to-school nights or after-school pickups from various clubs, I'd be able to schedule a vacation in mid-October just because! Or I could escape in late January when it is the coldest! Then covid hit 2 months before she graduated. Happily in the last 2 years my girlfriend and I have more than made up for it.

Brilliant, I feel exactly the same way!
Honestly, I feel some what shackled to our town. A great town, but been in the same place for 20+ years. Definitely a yearning to explore much more with hopefully time, money and health.

 

[2029FIREaway]

I agree it is better to plan for 5 years at 50/51.

However, once you get there you may feel differently because you will have a different perspective. We have people at work who used to say the minute they were eligible to retire they would be gone and 5-7 years later they are still working (people with millions in their 401k).

Important to continue to reevaluate and allow yourself the flexibility to change your mind. I guess what I learned from those people announcing their retirement one year, the next year and it goes on until they finally realize they better stop announcing it. I learned don't announce it.

Great points. Ideally we could take longer breaks and go back to work when we feel like it. Corporate life generally does not align with that thinking!

So, even though I feel like I need a long break right now. Work and school prohibits this. We’ve been good to do what we can though. Upcoming trips in April and June to look forward to.

 

[2029FIREaway]

Definitely agree, DW doesn't. However, she just went to 4 day w*rk week and is now banking 80-ish days / yr (including PTO & sick pay). Maybe consider a glide into retirement and taste a little before FT retirement?

DD college / married off in 08 & we've been gypsies ever since, living off & on in CA, TX & Mexico. So kids out of the house is a great thing.

A glide would be ideal. The corp industry I’m in doesn’t entertain any slowing down (at least not officially).

So it’s pedal to the metal and than a screeching halt I believe.

 

[Surewhitey]

A glide would be ideal. The corp industry I’m in doesn’t entertain any slowing down (at least not officially).

So it’s pedal to the metal and than a screeching halt I believe.

I thought the same thing for DW (mega insurance) but she has a way to get her way... She's pretty high up the food chain too.

 

[HI Bill]

If it works financially, FIRE at 50, not 55! In my case, health issues and COVID hit at 54-58, killing some of my best potential travel years.

 

[2029FIREaway]

If it works financially, FIRE at 50, not 55! In my case, health issues and COVID hit at 54-58, killing some of my best potential travel years.

Salute, HI Bill. First, I hope that you regain your health so travel is possible again (if not already healthy). My father got sick at 58 and passed away at the ironic (to me) age of 59.5

I’ve learned to put family and leisure first, before work. But work still gets in the way. I’ve told my wife I’ll be happy to have her retire first in two years and focus on health (she turns 50 in two years). I’m ok soldiering on for 4-5 more years until I hit 50 (max 51, which is 2029 and the year younger kid goes to college).

 

[Wile E. Coyote]

Salute, HI Bill. First, I hope that you regain your health so travel is possible again (if not already healthy). My father got sick at 58 and passed away at the ironic (to me) age of 59.5

I’ve learned to put family and leisure first, before work. But work still gets in the way. I’ve told my wife I’ll be happy to have her retire first in two years and focus on health (she turns 50 in two years). I’m ok soldiering on for 4-5 more years until I hit 50 (max 51, which is 2029 and the year younger kid goes to college).

Also, having a less stressed spouse that can pick up and carry other aspects of your lives to keep things more organized and put less pressure on you could enable you to be able to work with less stress. Someone that has your shirts done and makes your dinner (unless that is an impossible dream with your spousal unit -- LOL).