Can I be done please

[SALTedOut]

Hi, I've been a lurker for a while and decided I'd get some of your thoughts on my financial readiness. Mental readiness is another story; but I’m sure that is harder to help with on this forum. I’ve been burned out from work for several years now as I’ve essentially had the same high stress/high demand job since college. I dread Mondays and mostly sit around and wait for 4:00 so I can start planning for 5:00. I actually quit about 6 years ago but they talked me into coming back to qualify for my pension which I'm thankful they did. The first few years after that were OK but its bad again.

I'm 51, married and my wife is the same age. We have 2 daughters, one out of college with grad degree and a good job and the other with one more semester of college and her college fund has more than enough for her last year and those funds are not in my numbers below. She gets the remaining balance as a life starter for her. She is in a field that will not need grad school and she has accepted a job offer from her previous internship. Both kids should be self-sufficient… void of life errors.

We have paid off our house and have no debt. Two cars, both paid off and less than 3 years old. No CC debt either.

My investment portfolio is roughly as follows as of 1/1/19:

Retirement Funds (a mix of 401(k) and IRA)
Traditional - $1.175M
ROTH - $400K

Other Taxable -
Vanguard $4.1M

All of the above is roughly an 75/25 stock/bond mix. 95% held in broad based mutual funds with only individual 2 stocks owned. Stock fund split is 70% US / 30% foreign.

Current Salary (including average annual bonus) - $450K.

I carry a $2M term policy that goes another 6 years and a $250K whole life policy (I know, I know) that is almost done. That policy will then just sit there with no payments further due and the existing coverage. Wife has a $200K term policy that we took out when the kids were young to pay for full time care, if needed. It only has a few years left to pay and is cheap.

For Social Security, I ran a calculator to see how retiring early before the 30 year credit averaging and it’s projected at $2K/month at age 65. The haircut for not working until the full 35 credits are earned was only a few hundred per month. My goal would be to defer SSA payments until 70 to let the payments grow. As I understand SSA I'd be able to qualify for the $2K and my wife would get at least $1K as a spousal benefit if her calculated amount was less than that. If that is correct we'd have $3K monthly payments. But I'm just loosely counting on this in my numbers.


FIRE GOALS

I'm already two years past my first FIRE goal. I had a few life events, namely 2 house floods that forced us to end up selling our house for land value and buying a new property that should be safe as it’s off the ground. The good news is it forced us to downsize quicker than we may have otherwise which should cut down on our annual spend. Between flood insurance, IRS casualty loss rules and proceeds from land sale I ended up financially OK. This has all settled down now and we are moving forward with life again.

My current RE goal is late spring of 2019 (age 52). I'd retire with a non-COLA pension of approx. $65K with payments starting at age 58. If I kept working the pension grows at about $4K per year.

I've analyzed our spending over the past 3 years and considered changes in spending such as higher HI. My best guess is our retirement spending would start at around $200K/year. The bulk of the spending goes to (in rough order) taxes (income and property- $35K), HI premiums/deductibles $20K, other insurance (home/car/life/etc.)- $10K, food-$20K, travel-$20K, HOA Dues-$10K, Clothing-$5K, Household-$8K, Gym/Golf-$10K. The rest is miscellaneous including $10K/year to a fund for buying 2 cars every 8-10 years with cash. A lot of this I'm hoping is high but I'd rather be conservative with my thinking.

While I don’t know exactly what’s next it’s possible that I do some consulting on the side to keep some income coming in but it would be significantly less than my current income levels. However, I’d prefer it to be nothing for a while but relax and unwind. I have not included anything for future income in my calcs as that would just be extra.

We both come from long life families so I'm budgeting to age 99. I've run the numbers on numerous models with what I believe are conservative estimates of 5% investment returns, 4% spending increases and 4% inflation and most of the models seem to say GO FOR IT.

 

[kgtest]

Looks good to me, if all hell broke loose, cancel the GYM, stop buying things and going places, don't buy clothes , eat ramen, bean burritos and week old bananas for a year and you can shave off $45k of your expenses ( and just live off the other 85k or 52% of what you are today!


But in all serious, you seem like after the 2 floods you are more than ready...you called it! GO FOR IT!

 

[nuisance]

You have 5.7M in assets. 4% of that is 227k. If you want to go conservative, 3% of that is 170k. You'll be able to live comfortably on that, although if things get rough you may have to move to a cheaper place and cut out e.g. HOA fees. Your choices are:
1. Keep working, burned out, to get more security.
2. Retire now, enjoy life, and maybe cut back your lifestyle a little bit.

Personally I'd much rather have the free time with the risk of a small reduction in lifestyle than working in a job that burned you out already. If you want to keep working, I'd consider moving to another company, a reduced schedule, or simply taking a 2-month sabbatical. Being burnt out is pretty terrible, and you have the opportunity to cut it out of your life starting right now!

 

[EastWest Gal]

You should retire. You have enough, and your lifestyle will change and probably be less pricey. How much of your food and clothing budget is work related? And if you don’t quit soon, the stress will shorten your life and you won’t live until 99.

Many of us here have much less and no pension. You’ll be fine.

 

[LiveBelowMeans]

Congrats! You’re in great shape and congrats on successfully launching the two kids. You are ready and able! Just do it.

 

[flintnational]

Welcome to the forum. With your assets, pension and SS, you are in great shape. As others have mentioned, you also have a budget with a lot of discretionary spending that could easily be cut if the need arises. Congrats! Well done. If you can't make it, a lot of us are in trouble.

 

[street]

You are I great shape to, go for it!

 

[Conundrum]

I will defer to the more experienced on FIRE assessment for you.

One thing I can comment on from first hand experience is retiring at 51 was the best thing I did. I will have to live a bit more modest life because of FIRE but I am trading time for money and that was the right call for my life situation.

My health has improved dramatically. I have reduced my prescription medications by 50% under my doctors care & guidance. Hypertension, elevated heart rate issues. All gone!

I hindsight, I truly feel that my job was indeed, actually killing me.

 

[travelover]

You do realize that the average family income in the US is about $54K and most of them are paying a mortgage and saving for retirement and college costs? So, yea you can probably squeak by.

 

[clifp]

Financially this is a no -brainer. A nice pension at age 58 (wow), no debt, and ton of assets in non-retirement.

The fact that you dread your, high paying but presumably high stress, job is easily worth a couple million more in savings on deciding if you're ready to pull the plug.

So what is your mental reservations?

 

[HI Bill]

Welcome! Yes, I think you can be done. You have a nearly ideal AA, you have a reasonable withdrawal rate, you have boku insurance (maybe a bit too much), and you appear to be fully prepared financially!

As for SS, did you run the Excel version of their detailed calculator, called PIA? For those retiring early, with less than 35 years of earning history, it's the only way to complete an accurate estimate that I'm aware of:

https://www.ssa.gov/oact/anypia/anypia.html

If you make $2K at 65, and your FRA is 67, you should make a bit more than that (say, $2500); your spouse should qualify for 50% of your FRA amount. At 70, I'm guessing you'd qualify for $3K, and your wife $1.2K. The PIA calculator should give you a much more precise idea, as you have to enter each year's salary subject to SS withholding.

Cheers!

 

[JDARNELL]

The emotional side of ER is the hardest and takes a lot of time to prepare. You are smart to be thinking about it. Financially you are good IMO and with those numbers you have a lot of flexibility of the SHTF as long as you are realistic about what worse case would look like. I am amazed about how my health changed for the better after retiring. There is no way I would ever do anything to reverse those trends. High stress work takes a lot more out of you than you probably even know. And each year extra working is one less year you have for other things. You will make the right decision. Good luck!

 

[Vacation4us]

You do realize that the average family income in the US is about $54K and most of them are paying a mortgage and saving for retirement and college costs? So, yea you can probably squeak by.

Does it really matter what the "average" American makes and spends.

Sounds like soar grapes.

The OP makes more and spends more so 54k would not allow him to survive in retirement,

Since you have a substantial after tax fund you may find your taxes reduced in retirement compared to you working years.

I would retire and feel confident with your assets.

 

[38Chevy454]

I agree with the rest, you are plenty safe financially. You have more than enough after tax savings to bridge the years from 52 until pension at 58, where the after tax needs will reduce, and then reduce again once SS hits when you decide to take it between 62 and 70. You do have high expenses and seem to live in a high COL area, so that is some concern. But you have enough, so retire. Enjoy the freedom and lower stress.

 

[travelover]

Does it really matter what the "average" American makes and spends.

It does to the extent that one might worry if they had enough margin in their budget to keep their family safe and housed. Sometimes it is easy to lose perspective of how much it costs to have a middle class life if you have been living at the higher end.

Sounds like soar grapes.

Thanks for the concern, but my grapes are fine. Actually, we are living on about half our potential spending.

The OP makes more and spends more so 54k would not allow him to survive in retirement,

I guess it depends on how you define survive.

Since you have a substantial after tax fund you may find your taxes reduced in retirement compared to you working years.

I would retire and feel confident with your assets.

I agree.

 

[pb4uski]

I'm just wondering... surely you sense that you "have enough" and "have had enough" (your BS bucket is full).... so why are you still working?

 

[jollystomper]

To the OP - based on what you have posted, in my view, with you assets, it is no longer a financial decision for you on when to ER. It is an emotional decision.

 

[DrRoy]

Go.

 

[Ronstar]

Yes you can be done. Turn in your resignation, walk out the door, decompress for a while, and then live a full retirement life.

 

[hilltide]

You are set up nicely and ready to go. Like you said, you can always go back and consult if you felt the desire. there is so much more than the daily grind. Looking forward to being in your position and taking the leap. Good luck.

 

[tdv2]

Numbers look great!! I'd say you are ready to go focus on more important things.

 

[SALTedOut]

Thanks for all the thoughts. Here are some replies to your questions and comments:

if all hell broke loose, cancel the GYM, stop buying things and going places.... GO FOR IT!

Agree, There is some fat I can cut if needed. Just have to convince the DW. But she is looking forward to me not as stressed so I think we can head that direction if needed one day.

You do realize that the average family income in the US is about $54K and most of them are paying a mortgage and saving for retirement and college costs? So, yea you can probably squeak by.

Yes, I realize I've been very lucky and blessed. I entered a very stable profession and worked myself into a specialty area right as it started to boom. This has allowed me to exceed the "averages".

Does it really matter what the "average" American makes and spends.

Thanks! I drafted my "Hi I am..." three months ago but did not submit it until now because I felt like I'd get flamed for being in the position I am. Each of us has our concerns. They are all the same just different numbers. When I look at the lifestyle I have compared to the people I work with I'm way below them which is allowing me to even consider this. But I also completely understand, and agree with, the comments that if push comes to shove we can reduce our discretionary spending.

As for SS, did you run the Excel version of their detailed calculator, called PIA?

I have not but thanks for directing me to this. I'll get it done today to get a better picture. I'll probably still discount the potential for SS as I'm leery of its long term stability.

... with those numbers you have a lot of flexibility of the SHTF ...

OK, so many acronyms on here. Many of them I can figure out but what is SHTF? Is there a post somewhere with a list of them? I know many forms have one.

So what is your mental reservations?

... (your BS bucket is full).... so why are you still working?

My original target was two years ago at age 50 but the first house flood happened just before I turned 49. It took almost 1/2 a year to go through the FEMA process and put the house back together. At that time I decided to put the breaks on another emotional decision and see what happened. The second flood happened 9 months after we moved back into the house. Wife and I decided we could not go through it again and spent the next year trying to sell the house/land and rented for a year in a building that was off the ground to see how we liked condo living. We slept much better when it rained and the downsizing did not really concern us. We purchased a place this past summer and I feel like life has now settled down again.

I think mentally I'm fine actually and looking forward to it. My bigger concern is financial, especially with the latest downturn happening right as I'm entering ER. But the more models I run and the more I consider the options of scaling back when/if needed I think I've made my decision.

Thanks again for all the comments. They really FIREd me up.

 

[TriumphTR3fan]

You seem ready to go. You have prepared for this well. It seems more of a mental decision than a financial one for you. It can be scary to step away from a secure job.
There is a acronym list for the ER website. Here is a link: http://www.early-retirement.org/for...slang-frequently-used-on-the-forum-34884.html

 

[Aerides]

SHTF = Poop hits the fan

IOW (in other words) you have enough discretionary spending to wiggle with if there is a major financial mess.

 

[SumDay]

I retired last summer. I wish I'd done it sooner. I'm guessing you'll be saying the same thing shortly after you realize how wonderful it is to get rid of that stress.