Join Early Retirement Today
Reply
 
Thread Tools Display Modes
Almost there - Need Encouragement
Old 11-13-2021, 09:18 AM   #1
Dryer sheet wannabe
 
Join Date: Sep 2014
Posts: 11
Almost there - Need Encouragement

First post, but I've been around for many years lurking.

Age: About 42, Spouse the same
Kids: None
Anticipated Retirement: April 2022
Allocation: 80/20 Risky/Ballast

Let A = Annual expected spending in retirement. We have 30.55A set aside for retirement, or a 3.27% w/d rate currently, split roughly equally between taxable and non-taxable/qualified accounts. Plan to save another 1.15A between now and retirement date, so hope to have at least 31.7A or 3.15% w/d rate.

I am fairly handy with spreadsheets and am an amateur coder, and so I have created my own simulation tools to compare with Firecalc and the work seen on the Early Retirement Now blog. They all compare reasonably well to each other, and everything looks green across the board now, let alone in a few more months. That said, I seem to be suffering from a form of OMY.

I keep finding a few more things to save for to pad things to get comfortable. For example, in my calculation of A, I took our yearly spending for the last 5 years (which I have documented practically down to the dollar), adjusted it for things like anticipated ACA premiums, minus car insurance after going down to one car, etc. However, I decided to add a '13th month' as a just in case factor, which is included in my figures above. Without it, the 31.7A or 3.15% becomes 34.3A or 2.91% w/d rate.

Additionally, I decided we should set aside 1.25A for unexpected medical/dental expenses, and 1A for 'fun' (think crazy vacation or something), both of which we have already put aside, and that 2.25A additional is not included in the above figures or w/d rate.

While I'm very much looking forward to taking control of my time, I just feel nervous for a variety of reasons. As I have read other posters say from time to time, I will never be able to make the kind of money I do once I walk away from my j*b, inflation is high, the market seems overvalued. I wonder if I'm just inventing excuses, but I just don't know if I will really be able to pull the trigger. At the same time, I know that if I did stay on, I might be willing to work up to another year, but I don't see how I could take much more than that without moving to something different.

I think I just need some help on how to put things into proper perspective.
Shepard is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 11-13-2021, 09:23 AM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,263
Quote:
Originally Posted by Shepard View Post
...We have 30.55A set aside for retirement, or a 3.27% w/d rate...
I think I just need some help on how to put things into proper perspective.
After you get to a 3.27% WR, any fine tuning after that is akin to playing with your genitals.

Does the 3.27% WR plan includes SS?
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56
pb4uski is offline   Reply With Quote
Old 11-13-2021, 09:40 AM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Apr 2015
Posts: 5,800
It sounds like you have the financials down. It is my understanding that Firecalc and other calculations include the worst case scenarios over time, what ifs, etc.
Under 4% withdrawal at your age seems very reasonable for what could be a 40-50 year retirement.
Can you take a short sabbatical, 6 months or so from work and try your retirement budget and lifestyle?

Have you answered these questions in the FAQ section?:
Some Important Questions to Answer Before Asking - Can I Retire?

What does your spouse say/feel about the situation?

You can always earn more money/part time job/hobby job in retirement if desired.
You can't get more time.
__________________
Give a Man a fish, he will eat for a day.
Teach a Man to fish, he will eat for a lifetime.
pacergal is offline   Reply With Quote
Old 11-13-2021, 09:49 AM   #4
Moderator
MBAustin's Avatar
 
Join Date: Jul 2010
Posts: 7,922
Welcome, Shepard.

First, congratulations on being in such amazing financial condition that you can even contemplate ER at such a young age. That takes a lot of hard work and discipline!

I would be a little concerned with such an aggressive AA for such a long period of retirement, especially with the current market valuations. Seems to me you have a good bit of sequence of returns risk.

Pacergal raises good points above. Also, you say you might consider moving on to something different in a year or two - have you seriously looked into what that might be? It's a pretty good time for changing jobs as there's a lot of demand in many fields - a change to something less stressful / more interesting could be a good move. Or something seasonal or part-time.

Finally, you say you are looking forward to taking control of your time, but do you have a good idea of what you actually want to do with your time?
__________________
"One of the funny things about the stock market is that every time one person buys, another sells, and both think they are astute." William Feather
----------------------------------
ER'd Oct. 2010 at 53. Life is good.
MBAustin is offline   Reply With Quote
Old 11-13-2021, 10:08 AM   #5
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
OldShooter's Avatar
 
Join Date: Mar 2017
Location: City
Posts: 10,331
Quote:
Originally Posted by Shepard View Post
... We have 30.55A set aside for retirement, or a 3.27% w/d rate currently, split roughly equally between taxable and non-taxable/qualified accounts. ...
Without some real dollar numbers it's hard to react, but I think you're saying that you have 30 years of needs saved assuming no inflation and that your planning horizon is from 42YO to maybe 90, so 48 years. 48 years is a long, long time; plenty of time for a black swan or two to fly into your life. Hopefully you have a lot of flexibility to cut back on "A" -- you may need it.

You don't mention inflation as a planning parameter. For reference, prior to the current excitement IIRC US historical inflation has been 4.11%. At that rate, today's dollar will have the buying power of 36 cents after 24 years and 13 cents at the end of 48 years. SORR is a risk, of course, but it can be managed and market drops are always followed by recoveries. Inflation, though, is a permanent hit. I think that few of us worry enough about it.
__________________
Ignoramus et ignorabimus
OldShooter is offline   Reply With Quote
Old 11-13-2021, 10:10 AM   #6
Thinks s/he gets paid by the post
 
Join Date: Feb 2019
Location: St Pete
Posts: 1,233
My numbers are/were about the same*... you can look at my thread for my details. I say do it, you can futz forever and every day you do is another day you are not FIREd. Once you jump, that eliminates one variable and you can still mess around adjusting and optimizing your actual withdrawals. I do find myself playing with spreadsheets less (EOM updates as always but no multiple times a week silliness) now that I'm free! Just enjoying the ride now. You look to be in good shape, as many have said before "Jump on in, the water is FINE!"


*I tend to be a bit over-conservative in many of my assumptions.. budgeted for full health care cost, plan my expenses based on an immediate 30% market drop, sinking funds for known unknowns. Sounds like you may be similar with the 13th month. Realistically, things like a new car can be deferred if the market goes way wrong but are in the plan as "fixed"
__________________
FIREd 7/2021 at age 47
FLSUnFIRE is offline   Reply With Quote
Old 11-13-2021, 10:32 AM   #7
Recycles dryer sheets
LarryMelman's Avatar
 
Join Date: Jul 2019
Location: Phoenix
Posts: 328
You do not say whether "A" is just expected routine expenses or if it includes expected irregular expenses like cars and major home items like roofs and furnaces/ACs. Or if "A" includes new expenses you plan to have in retirement. Especially with the need to plan out 40-50 years. Allowing only an extra "A" or two over all that time seems quite inadequate.

I say that you are nowhere near ready. But I also know that people who refuse to spell out the word "job" probably already have their minds made up.
LarryMelman is offline   Reply With Quote
Old 11-13-2021, 11:25 AM   #8
Dryer sheet wannabe
 
Join Date: Sep 2014
Posts: 11
Thank you all for the replies. I appreciate it very much.

Trying to reply in order of responses:

@pb4uski - The 3.27% w/d rate does not include SS, which is another source of conservatism I suppose. However, with 20+ years before it would be in play, I just figure it will be a bonus.

@pacergal - I could take a sabbatical or short break, but any break would likely mean that my income would drop by at least half upon returning. Knowing that, I usually conclude that I should just stick it out until I am finally done.

As for the FAQ, I went and reviewed those and I think I have it all decently covered. I know my expenses very well, and barring something unexpected, I know what I am going to spend in retirement too. I'm ignoring SS and a very small pension I have in my calculations, and I account for taxes, etc.

My spouse is supportive. This is a goal we have been working toward together for many years. They stopped working a few years ago and are ready for me to join the party. However, they generally leave the numbers to me and would like to hear that we are good to go before I take the plunge. We agreed that I would stay in my j*b until April of 2022 to at least get one more bonus from MegaCorp to increase the nest egg as described in my first post.

@MBAustin - I am very nervous about SORR, absolutely. I have actually grown more conservative over time. I was 100% risk on for a long time until the numbers started getting within striking distance of target, then I didn't want to risk having to work longer because of it, so I backed up to 80/20. I know that is still fairly aggressive, so I use a mixture of things to try to mitigate that, such as equities/REITs/Put Option writing in the risky category vs Bonds/TIPS/Commodities/Cash in the Ballast category in an attempt to have some non-correlation in the assets.

When looking at safe withdrawal rates over long periods of time, the analysis tends to encourage more risk than less, but I agree that increases SORR. I also always have something ERN once wrote in my head "Retirement success is inversely correlated with the CAPE at retirement" (or something to that effect), and with the CAPE near 40, that is scary for sure.

I would make the same comments about a new role as above. I would do it if I needed to if, for instance, I retired and the portfolio got cut in half. However, doing it immediately to stay employed is a tough sell as the income drop would be so large.

As for my time, I do have plans, but I confess I am a little worried about eventually becoming bored. My spouse believes this is not a real threat or concern for me when we have discussed it, and so far they have not been bored in several years, so that is encouraging.

@Old Shooter - Yes, I have over 30 years of anticipated needs saved. Inflation is accounted for in FireCalc and in ERN's work by adjusting spending to maintain purchasing power I believe (it is also in my own simulators, but obviously nobody else has seen that). Either way, I agree with you that it is scary to contemplate even knowing that those calculators use inflation, especially when looking at the latest number of 6.2% for October of 2021. However, other than moving some of my bond allocation to TIPS and commodities, I'm not sure what else to do about inflation.

As for flexibility in 'A', yes there is some. As FLSUnFIRE mentioned sinking funds and LarryMelman asked about irregular expenses, I have sinking fund allocations in my monthly budget for future car purchases, major home repairs, electronic gizmo purchases, vacations, etc. I have also created an "Emergency Mode" budget that would remove many of these items if needed, and I estimate we could get by on 60% of A, although it wouldn't be nearly as fun.

@FLSUnFIRE - Thank you for the reply. I agree our situations seem fairly similar after I read through your post. As mentioned above, I also create sinking funds in addition to the other potential conservatisms built into the budget. I don't like having any expense I don't have a fund ready to go for. I know it is mental accounting, but it works for me.

@LarryMelman - What withdrawal rate or multiple of A would you feel is sufficient?
Shepard is offline   Reply With Quote
Old 11-13-2021, 11:38 AM   #9
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
OldShooter's Avatar
 
Join Date: Mar 2017
Location: City
Posts: 10,331
Quote:
Originally Posted by Shepard View Post
... other than moving some of my bond allocation to TIPS ...
That's what we did as we were redecorating the portfolio for retirement in 2006. Our conclusion was that our only real risk was runaway inflation, so we put almost all of our fixed income tranche into the 2s of 26, lowest interest rate at the time of minimize reinvestment risk and the longest available TIPS at the time.

I don't recall the exact number but in the trailing 12 months to 9/30/21 our return from the TIPS was over 6%. Over the longer haul the return has been quite good as interest rates went to zero and we still had that 2% coupon. That was pure luck of course but we're happy to have it.

More generally, TIPS return slightly less than similar govvies. We view this difference just like we view our fire insurance premium -- a cost to offload some risk. We pay happily and hope that both insurance premiums are "wasted" with no fires and no wild inflation.

No interest in commodities.
__________________
Ignoramus et ignorabimus
OldShooter is offline   Reply With Quote
Old 11-13-2021, 11:38 AM   #10
Recycles dryer sheets
 
Join Date: Dec 2018
Posts: 209
I’m 41 and have an almost identical situation and numbers. My tentative Mar 2023 target date is approaching.

I am going with a 60/40 AA because of SORR. I find that the difference between 60/40 and 80/20 isn’t much as far as success rates so am a bit more conservative than you. but you have a bigger chance of major growth over this long horizon.

I also have last 5 years of expenses mapped. And I am assuming if that is ~75k and with ACA I’m using 110k or so to back into my 30-33x number. I feel like the 35k gives me ACA premium cost wiggle room plus added expenses.

How will you control income to get ACA subsidies (if that is part of your plan)? That’s the toughest piece to plan: health insurance and how to free up cash to live on while keeping income low enough to get a healthy subsidy.
Retireby45ish is offline   Reply With Quote
Old 11-13-2021, 11:53 AM   #11
Dryer sheet wannabe
 
Join Date: Sep 2014
Posts: 11
Quote:
Originally Posted by Retireby45ish View Post
How will you control income to get ACA subsidies (if that is part of your plan)? That’s the toughest piece to plan: health insurance and how to free up cash to live on while keeping income low enough to get a healthy subsidy.
I am assuming no ACA subsidies in my calculation of 'A' (I have assumed I am paying the full premiums), so any subsidy I get would be further conservatism. That said, my plan to get or not get ACA subsidies is highly dependent on the returns from the option writing portion of my income/portfolio:

1) Have a great option year (Option Income > ACA subsidy limit). In this case, there is no chance of getting a subsidy, but I made a ton of money, so that's okay, that was what 'A' plans for.

2) Have an okay option year. (ACA min income < Option Income < ACA subsidy limit). In this case, I would withdraw from Roth accounts or other taxable sources without capital gains to achieve A. I would get whatever subsidy that level of income provides

3) Have a bad option year (Option Income < ACA min income). In this case, I would sell taxable assets to achieve A, and if I still didn't have enough capital gains to hit the income minimum, I would then convert regular 401(k) funds to Roth to have whatever amount of income I wanted.

DISCLAIMER: I am not a tax/ACA professional and am not providing anyone with tax/ACA advice...
Shepard is offline   Reply With Quote
Old 11-13-2021, 12:43 PM   #12
Recycles dryer sheets
LarryMelman's Avatar
 
Join Date: Jul 2019
Location: Phoenix
Posts: 328
I am asking if you really really trust your "A" number. You say you know your current A very well. As do I, it's very low, even if I average in major purchases like cars and etc. But that will not be A in retirement. Especially not in the early years of retirement, when your health will be good and you will transition into a new lifestyle. That's the A you need to forecast. On top of that are really major unplanned expenses, both good and bad. You seem to be throwing various small fudge factors into your A. I'm saying to plan for 2A or 3A, with an occasional 10A year thrown in because "things happen".

Lastly, you refer to an unnamed "they" a couple times ("They stopped working a few years ago and are ready for me to join the party.", "so far they have not been bored in several years"). Are these friends? relatives? co-workers? Have you asked them how their "A" changed in the early years of retirement, when good health and ample free time allow for more spending?
LarryMelman is offline   Reply With Quote
Old 11-13-2021, 01:02 PM   #13
Thinks s/he gets paid by the post
MissMolly's Avatar
 
Join Date: Jun 2010
Posts: 2,134
Quote:
Originally Posted by LarryMelman View Post

Lastly, you refer to an unnamed "they" a couple times ("They stopped working a few years ago and are ready for me to join the party.", "so far they have not been bored in several years"). Are these friends? relatives? co-workers? Have you asked them how their "A" changed in the early years of retirement, when good health and ample free time allow for more spending?
I'm pretty sure "they" is a spouse.
__________________
And whatever your labors and aspirations in the noisy confusion of life, keep peace in your soul. With all its sham, drudgery, and broken dreams, it is still a beautiful world. Be cheerful. Strive to be happy.- Desiderata by Max Ehrmann
MissMolly is online now   Reply With Quote
Old 11-13-2021, 03:58 PM   #14
Thinks s/he gets paid by the post
HI Bill's Avatar
 
Join Date: Dec 2017
Posts: 2,533
Welcome! Does "A" include enough $ to fund any new hobbies, travel, intermittent expenses, and any purchases that you might want? If so, you're good to go financially. I kept increasing "A" to where when I FIREd, it was triple (3X) my spending level before FIRE. This was at first, a way to have discretionary travel $ in an amount equal to the non-discretionary $, and then later, to allow the purchase of a house that cost 3X our condo value. You just need to ensure that A will fund your current picture of your RE, and allow you to spend on what you want. I find myself buying new tools and stuff weekly, even 13 months after moving into my new place. $23K later, I'm about done with furniture. But I'm now building custom garage cabinets, and may branch out and do a 12-foot long vanity for the master bath.

Good luck! OMY is a real and constant threat to RE. Don't let OMY win!
__________________
Balance in everything.
HI Bill is offline   Reply With Quote
Old 11-13-2021, 04:12 PM   #15
Thinks s/he gets paid by the post
skyking1's Avatar
 
Join Date: Feb 2021
Location: Puget Sound
Posts: 3,221
Quote:
Originally Posted by HI Bill View Post
Welcome! Does "A" include enough $ to fund any new hobbies, travel, intermittent expenses, and any purchases that you might want? If so, you're good to go financially. I kept increasing "A" to where when I FIREd, it was triple (3X) my spending level before FIRE. This was at first, a way to have discretionary travel $ in an amount equal to the non-discretionary $, and then later, to allow the purchase of a house that cost 3X our condo value. You just need to ensure that A will fund your current picture of your RE, and allow you to spend on what you want. I find myself buying new tools and stuff weekly, even 13 months after moving into my new place. $23K later, I'm about done with furniture. But I'm now building custom garage cabinets, and may branch out and do a 12-foot long vanity for the master bath.

Good luck! OMY is a real and constant threat to RE. Don't let OMY win!
Congrats on the tools and creative stuff. That is the good stuff for me too, and you are right:
Don't let OMY win. Right now I am fighting with pushing back 6MM.
__________________
Class of 2023
OMY to 2024
Operating Engineer for a commercial plumbing contractor
skyking1 is offline   Reply With Quote
Old 04-06-2023, 07:03 AM   #16
Dryer sheet wannabe
 
Join Date: Sep 2014
Posts: 11
Update 4/6/2023

Once the market started turning down at the start of 2022, I decided to wait it out a bit and kept saving/working as my portfolio dropped. Fast forward to today, I am back at 30.5A (years of living expenses), or a 3.28% withdrawal rate, with an extra 4A on the side for various contingencies and sinking funds.

I am moving toward a retirement date somewhere between 5/5/2023 and 6/2/2023, but I still find myself thinking about OMY. I make enough and live frugally enough that OMY is worth 2A in additional savings. I'm getting more confident I am ready but it feels like a lot of money to walk away from at 43.

Thanks for listening
Shepard is offline   Reply With Quote
Old 04-06-2023, 08:41 AM   #17
Moderator
MBAustin's Avatar
 
Join Date: Jul 2010
Posts: 7,922
Shepard, only you can decide what is more important to you - a more cushioned nest egg or time to do what you really want on your own terms. I don't see where you have specific plans for your time, but with your spouse already out of the w*rkforce and not concerned about you getting bored, that's a good sign. Is your spouse encouraging you one way or the other at this point?
__________________
"One of the funny things about the stock market is that every time one person buys, another sells, and both think they are astute." William Feather
----------------------------------
ER'd Oct. 2010 at 53. Life is good.
MBAustin is offline   Reply With Quote
Old 04-06-2023, 09:29 AM   #18
Thinks s/he gets paid by the post
 
Join Date: Jan 2014
Location: Everett
Posts: 1,592
I'd planned to retire in 2017. Met my financial goals, but was enjoying my job and decided to stay two more years. Left in 2019, with big plans for travel and other activities in 2020. Then covid hit, so I spent my first two years of retirement not being able to do many of the things we'd planned.

I really regret not retiring when I'd originally planned. The market crash during covid would have been more alarming if I had, but things came back and I would have been fine.

There are also health issues to consider. You and your wife are only 42, so healthwise you probably have many of your best years still ahead of you. Take advantage of them! Go crazy! Come your 50s, you may be spending more time than you'd like dealing with health issues.
O2Bfree is offline   Reply With Quote
Old 04-06-2023, 10:47 AM   #19
Dryer sheet wannabe
 
Join Date: Sep 2014
Posts: 11
Quote:
Originally Posted by MBAustin View Post
Is your spouse encouraging you one way or the other at this point?
My spouse is supportive, but leaves all the financial stuff to me, so they just want me to confirm everything is fine and that's it. We have agreed that my last day will be no later than 6/2/2023, but could be earlier if I want, although 5/5 is the closest realistic date at this point.

Any lingering OMY or even 'one more month' thoughts are just my own demons to contend with. That said, unless something really crazy happens in the market over the next few weeks, I intend to retire as planned.
Shepard is offline   Reply With Quote
Old 04-06-2023, 10:23 PM   #20
Recycles dryer sheets
 
Join Date: Oct 2021
Posts: 468
I retired on 1/3/2022 (the start of the bear)… Assuming all the normal tools (Firecalc) show positive results then press forward and don’t look back. Congrats!
RetiredAt49 is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Can a log curve provide some encouragement? donheff COVID-19 | Containment Area 1 03-23-2020 07:47 AM
Expat Lite - Need Some Encouragement Llep Life after FIRE 10 02-24-2015 02:57 PM
Need Some Encouragement Bigal50 Life after FIRE 22 04-25-2013 06:26 PM
Need some encouragement bob58 Other topics 9 11-24-2005 07:49 PM

» Quick Links

 
All times are GMT -6. The time now is 07:12 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.