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Am I on FIRE?
Old 07-07-2017, 11:53 AM   #1
Confused about dryer sheets
Join Date: Jul 2017
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Am I on FIRE?

I’m new to the forum and would like your assessment to help determine if I am on the right track to retire in 2023 at the age of 56.
Job Salary: $85,801 (2nd career – current employer)
Military Retirement: $36,972 (1st career – retired in 2006)
Traditional 401k balance: $239,706; monthly addition including match = 1,856 ($22,281 annually)
ROTH IRA balance: $74,561; monthly addition = $541 ($6,500 annually)
My home will be paid for in 2021. I have no other debt. My health care is covered by my military retirement.
I would like my total income in 2023 to be $58,200 after I retire, my military retirement currently provides $36,972, which leaves $21,228.I will have a small pension from my 2nd career of about $10,200 a year, which leaves $11,028 that my investments will need to cover.
My current asset allocation is 100% equities, which I plan to start shifting about 2% per year into bonds starting January 2018.
I think I am on track, please let me know what you think. Any guidance and advice is much appreciated.

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Old 07-07-2017, 12:07 PM   #2
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I am not a financial guru by any means so here is my 2 cents:

Congrats, you are in great shape.

One concern for me (everyone is different) would be the 100% stock allocation and being 5 years from retirement. I would want to have it at 50% (but that's just me). A serious market correction in the next 5 years might delay your it may take 3+ years to get back to even.

OTOH you only need a small % to make up your funding gap (11,000). I am assuming you have a COLA pensions.

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Old 07-07-2017, 12:15 PM   #3
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Agreed - you'll be in great shape. Assuming healthcare is a non-issue for you due to vet benefits? Congrats on having your expenses nailed down to such a degree - that's rare
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Old 07-07-2017, 12:17 PM   #4
Confused about dryer sheets
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Hi Capjak!

Yes, I do have COLA pensions. I have considered shifting more towards bonds and cash at a faster rate than 2% per year (in case of a market correction). But I tend to have a bit more risk tolerance because of the relatively small funding gap.
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Predictions are hard, but
Old 07-07-2017, 12:50 PM   #5
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Predictions are hard, but

The math isn't complicated. At age 56 you want to score $11,028 from your stash, which will include

401k: (239,706 current) + (6 years of adding 22,281) = 373,392
Roth: (74,561 current) + (6 years of adding 6,500) = 113,561
Total: 373,392 + 113,561 = 486,953
WR: 11,028/486,953 = 2.2%

Two-point-two percent is way safe. You'll have available ten years worth of withdrawals just from the Roth account to carry you well past 59.5 when you can tap the 401k without penalty.

And that doesn't even include an estimate for market growth. You're on track. Live long and prosper.

Paying it forward is the best investment.
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Old 07-07-2017, 01:07 PM   #6
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Originally Posted by Trumpcardz View Post
My health care is covered by my military retirement.
Is it?
If you're planning to only make use of VA healthcare, that may be true.

But if not, and you're currently using Tricare, you'll need to sign up for Medicare when you're 65, and that will cost (Part B) something more than $134 a month (that's this year's cost). TFL will cover the excess costs that Medicare doesn't pay.

So that's one extra cost you may need to account for.

You do seem to be in good shape. Welcome to the forum!
I thought growing old would take longer.
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Old 07-07-2017, 01:09 PM   #7
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Your Golden. Is your second pension solid? My dear bother in law took a beating , his pension was slashed to about 1/3 the promised amount.
Withdrawal Rate currently zero, Pension 137 % of our spending, Wasted 5 years of my prime working extra for a safe withdrawal rate. I can live like a King for a year, or a Prince for the rest of my life. I will stay on topic, I will stay on topic, I will stay on topic
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Old 07-07-2017, 01:15 PM   #8
Confused about dryer sheets
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I currently have Tricare Prime for my healthcare coverage (and I have VA healthcare coverage also, I just never go to the VA - horrible service).

I am aware of the need to sign up for Medicare and will use TFL.

Another caveat is that I plan on taking SS at age 62 and this will help cover Part B costs, as I don't think I will need the SS to help cover hardly any other expenses.
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Old 07-07-2017, 01:24 PM   #9
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If I were you, I'd be working on a 2019 plan... unless you love your 2nd career.
Retired at 52 in July 2013. On to better things...
AA: 55% stock, 15% real estate, 27% bonds, 3% cash
WR: 2.7% SI: 2 pensions, some rental income, SS later
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Old 07-07-2017, 01:49 PM   #10
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You'll have no problems. I'm retired military (2002) and retired from a second career in 2013. Current age is 62 and we haven't missed a beat. I retired at 57 in a mortgage free home. I'm not much for revealing my actual new worth.

You're doing a great job with the 401K contributions. If you're married and your significant other is not employed outside the home, I would make some spousal contributions to her IRA as well.

Tricare is going up for us less than 65 types, so I would pad a bit for increased costs there. Like another person mentioned, we military types have to purchase Medicare Part B to get the Tricare for Life supplement.

Congrats and well played.
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Old 07-08-2017, 06:27 AM   #11
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You have not estimated your SS at 62, FRA or age 70. I would think that even shaving it to 75% would mostly fill your funding gap, even after deducting your Medicare premium.

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Old 07-08-2017, 07:48 AM   #12
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I would not feel comfortable having 100% equities in your situation. You have done well with your strategy so far because we have had such a good bull run. But a major correction in the next couple of years could cause you to rethink whether you are ready to retire in six years. If you shift part of your balance from equities to bonds now you will lock in your gains, and because they are all in tax deferred accounts you will not have to pay any CG taxes until you begin your withdrawals.

Give it some thought. You've already won the game, so why gamble with that much risk?
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Old 07-08-2017, 08:15 AM   #13
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Don't you have any after tax investments?

If you have listed all your assets your spend number might be are making around 125 and saving 29 which is great but makes me wonder about the 58 thousand spend rate after you retire. It might be house payment and taxes, but I'm just wondering.

Also wondering that since you will have 2 pension streams why you would take such a haircut on your SS payment.

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