Am I close?

[Gumby]

Quote:

Originally Posted by Retireby45ish 6% distributions (I assume dividends mostly) per year is really high. I’d say something like 2-3% is more accurate, isn’t it?

One of my core holdings is Oakmark Equity and Income Fund (OAYBX). In 2020, the distribution was 4.2%. From 2017-19, it was 7.7%, 8.7%, and 8.5%. An assumption of 6% seems reasonable to me, but, as I said, the OP should run his own numbers.

[CardsFan]

Quote:

Originally Posted by Retireby45ish 6% distributions (I assume dividends mostly) per year is really high. I’d say something like 2-3% is more accurate, isn’t it?

I am pretty sure Gumby was including Cap Gain distributions. In our case div+int+cap gains on our mutual funds is about 5.5%. If the funds are more tax efficient, with little in the way of capital gains, then your 2-3% number is probably closer.

[Retireby45ish]

Quote:

Originally Posted by Gumby One of my core holdings is Oakmark Equity and Income Fund (OAYBX). In 2020, the distribution was 4.2%. From 2017-19, it was 7.7%, 8.7%, and 8.5%. An assumption of 6% seems reasonable to me, but, as I said, the OP should run his own numbers.

Ah this makes sense. Missed that.
Then perhaps, for the ACA subsidy it might be worthwhile to rotate into funds with less distributions.

I’m currently thinking of this as I’m a few years away myself and want to remain under that ACA cliff.

[Gumby]

My OAYBX holding is entirely in tax deferred, so I'm not particularly worried about its tax efficiency, which is admittedly poor.

[333three]

Hello all-

I just wanted to post an update and see if there are any new thoughts...

Our assets have increased and are now as follows:

1.8 mm in taxable at 60/40 (index and bond funds)

341k in cash

878k in IRA

I am still 48 and DW is 44.

We still own our home with no mortgage and I assume the value has gone up during this real estate frenzy, but I don’t count its value in my numbers since I need a place to live.

Our spending is still low.... last year I ended up spending about $40k and this year we are on track for the same. That includes property tax, but not income tax or health insurance. I don’t count income tax because if I retire, it will be substantially less than we pay now. I don’t include health insurance because it is paid 100% by my company (both of us).

If I retire, I think I may spend slightly more than I spend now because I would hope to travel more....maybe another 10-12k. Also, I would have to pay health insurance and some income tax, although I don’t know how much if I’m not working.

So... where do you think I stand? Am I close?

[street]

333three

Congratulations on your accomplishments! Very nice and a portfolio like yours takes work and doesn't happen by accident.

I'm far from an expert on finances but but running your numbers with what you say are your expenses quoted, you should be good for 45 years in ER. Of course you have SS coming at some point also.

Health care is something you will want to explore (ACA).

I beleive you will be good to go and because you are responsible spenders and savers.

[333three]

Quote:

Originally Posted by street 333three Congratulations on your accomplishments! Very nice and a portfolio like yours takes work and doesn't happen by accident. I'm far from an expert on finances but but running your numbers with what you say are your expenses quoted, you should be good for 45 years in ER. Of course you have SS coming at some point also. Health care is something you will want to explore (ACA). I beleive you will be good to go and because you are responsible spenders and savers.

You are right – I suppose we will have some Social Security benefits, but don’t include that because I have no idea what it will actually be. Additionally, I don’t have a firm idea of what health insurance might cost. I’ve seen it discussed here with wildly varying numbers. I’ll have to figure that out.

My two concerns are sequence of return risk as it seems we are at historic highs right now. I would also like to figure out what the maximum that I could spend would be while still ensuring a safe retirement

[OldShooter]

Quote:

Originally Posted by 333three ... I would also like to figure out what the maximum that I could spend would be while still ensuring a safe retirement

So would the rest of us.

[street]

Quote:

Originally Posted by 333three You are right – I suppose we will have some Social Security benefits, but don’t include that because I have no idea what it will actually be. Additionally, I don’t have a firm idea of what health insurance might cost. I’ve seen it discussed here with wildly varying numbers. I’ll have to figure that out. My two concerns are sequence of return risk as it seems we are at historic highs right now. I would also like to figure out what the maximum that I could spend would be while still ensuring a safe retirement

IMO you will be just fine. Your spending is ~1.3% of portfolio money not including SS. Your low WR will help you recovery faster and sustain your curtain amount fairly well tough times.

If history repeats itself you will have a much larger amount of money as time goes on. We are all in the same boat if things go bad, then you will need to adjust and stay the course.

[pacergal]

I would recommend you
*check SS website to find you numbers,(making sure you put in 0 income from now until claiming)
*check healthcare.gov for your state and find some accurate healthcare costs for your family
*run Firecalc with these numbers and make sure yearly spend includes all taxes, etc.
Also under the Early Retirement FAQs is a sticky: Some Important Questions to Answer Before Asking - Can I Retire? Answer those questions honestly and thoroughly.

But, as others have mentioned, you are looking good.

[Bamaman]

Congratulations. You've done very well for yourself.

I'm not going to get tied up in the numbers.

But with relatively low yearly expenses, do you have any hobbies or other things to take your time after retirement? How are you going to spend your days when you realistically have 40-50 years in retirement?

I had a friend that sold his lead smelting plant when the EPA started getting tough. He had all the money he could spend. He did a little flying and a lot of soaring in gliders to start with. And he used to go to the stockbroker's office and watch the tickertape--day trading. But mostly, he sat and watched television and did not much of anything the last 30+ years.

It's one thing to prepare for retirement fiscally. One must also prepare for retirement mentally and physically.

I ER'd 12 years ago, and have never quit building--something all the time. I'm trying to finish my current projects, and go into grass cutting only mode.

[teetee]

Well done. I would consider converting IRA to Roth between now and RMD age while you have no income to minimize tax liability in the future.

You are both young. Are you going to travel after ER? Or you and your wife are not ER and the same time?

[stephenson]

You're pretty darn young - do you like whatever you do for work? Do you have a lot of associates at work? Same questions for your spouse?

[cnocmmz]

Quote:

Originally Posted by cat4ever Consult firecalc.com and plug in your numbers. You'll also need a social security estimate (see https://www.ssa.gov) and any pension info you may have to successfully use firecalc. For your expenses be sure to include federal and state income taxes you'll need to pay, especially if/when you plan to cash out of IRAs or pay capital gains as you cash out of stocks for living expenses. Putting in 75K for spending and no SS or pension into firecalc, you are looking good for a 45 year retirement. SS will make you look even better. Make sure your expenses are correct though, 75K including health insurance and taxes is fairly frugal, and I commend you if it works for you, but big "one time" expenses seem to pop up on a regular basis, e.g. new roof, new car, new tires, new furnace, etc. others on here are better at this so they will probably chime in.

Concur: 75K may be a bit frugal! Think hard about the future and what you want to do after the gig is over? You have done well and I want to be optimistic for you; just double check your numbers and how you are invested. I am of the belief that the next decade or so will be challenging for investors.

[RetireeRobert]

Quote:

Originally Posted by 333three Hello all- I just wanted to post an update and see if there are any new thoughts... Our assets have increased and are now as follows: 1.8 mm in taxable at 60/40 (index and bond funds) 341k in cash 878k in IRA I am still 48 and DW is 44. We still own our home with no mortgage and I assume the value has gone up during this real estate frenzy, but I don’t count its value in my numbers since I need a place to live. Our spending is still low.... last year I ended up spending about $40k and this year we are on track for the same. That includes property tax, but not income tax or health insurance. I don’t count income tax because if I retire, it will be substantially less than we pay now. I don’t include health insurance because it is paid 100% by my company (both of us). If I retire, I think I may spend slightly more than I spend now because I would hope to travel more....maybe another 10-12k. Also, I would have to pay health insurance and some income tax, although I don’t know how much if I’m not working. So... where do you think I stand? Am I close?

It is enough. $3 million assets and no debt. At very conservative 3% withdrawal rate with annual inflation adjustments, that $3 million will produce $90,000 annual income. Or way, way ultra conservative withdrawal rate of 2% will produce income of $60,000. You stated annual spend level of $45k to $50k. So you are good to go.

Congratulations on positioning yourself so advantageously.

[flintnational]

Congratulations. You have done a great job with your savings. At your age, I would keep my WR at or below 3% for several years. In your late 50's or early 60's it could be increased to around 4%. At your young ages, I would be concerned about SORR and longevity risk. 3% during the early years should get you past both risks. But, plan to be flexible.One or both of you could be retired for 50+ years.

[pb4uski]

Quote:

Originally Posted by 333three .... Am I close?

No, you're not close... you're over by a lot. You worked too long.

[RetireeRobert]

Quote:

Originally Posted by pb4uski No, you're not close... you're over by a lot. You worked too long.

+1 This is certainly another way to look at it!

[corn18]

Quote:

Originally Posted by pb4uski No, you're not close... you're over by a lot. You worked too long.

Winner, winner chicken dinner! Retire now and figure out the next phase of your life.

[cfran]

This is a complete no-brainer, well done you are more than ready to pull the plug. Up you budget if need be, plenty of wiggle room even at your young age!