Can we FIRE with less than a MILLION???

[cnocmmz]

Just know the first 1-3 years when you retire the sequence of returns is very important. For example. This year 2022 is looking bleak and if you are pulling 4 % tread carefully. Coupled with 8.6 %. Inflation, your army of $$$$’s are really shortened on. Cash is king during these times. Just my two cents.

[cyber888]

Great. your Home insurance and Property taxes are quiet low. Car insurance - is that for 1 or 2 cars ?

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Originally Posted by 2HOTinPHX Here's a quick snap shot of our annual budget. It pretty small cause we have no debt and no expensive hobbies. Are we missing anything for a retirement budget other than unknowns like taxes? The medical expenses area were estimated before visiting Healthcare.gov and seems we could lower our cost there? Bills Monthly Yearly ________________________________ Electric 143.25 1,719.00 Home Gas 41.08 493.00 Water 63.25 759.00 Home Insurance 45.00 540.00 HOA dues 37.58 451.00 Property taxes 172.33 2,068.00 Groceries 600.00 7,200.00 Car insurance 56.83 682.00 Car registration 19.67 236.05 Medical Prems 1,000.00 12,000.00 Dental Premium 50.00 600.00 Vision Care 33.33 400.00 Medical costs 83.33 1,000.00 Prescriptions 45.83 550.00 Car Gas 59.58 715.00 Restaurants 100.00 1,200.00 Phones 60.00 720.00 Internet 61.11 733.32 Streaming 16.82 201.84 Charities 100.00 1,200.00 Vacation 400.00 4,800.00 Spending Cash 150.00 1,800.00 ___________________________________ TOTAL 3,339.02 40,068.21

[2HOTinPHX]

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Originally Posted by cyber888 Great. your Home insurance and Property taxes are quiet low. Car insurance - is that for 1 or 2 cars ?

Car insurance is for 1 car. It just went up about 50.00 a year and home insurance went up 200.00...everyone wants to get in on the 2022 great money grab.

I am going to wait till end of the year at this point to see if the world is in a better place. Hopefully improves soon as a lot of people are really worried again. In 2007-8 my company had a 10% company wide lay off due to the big slow down. They offered 1 years severance pay with medical insurance for those with 10 years or more....I would sign up for that in a heartbeat. I don't expect that but you never know what goes on in the closed door corporate meetings.

[NomDeER]

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Originally Posted by arcyallen I'll let others sort the details, but here are two things I'd keep in mind: 1) You'd be retiring near market highs. Are you emotionally prepared if the market dropped 50% and stayed there for a bit? I've found a large number of people think yes...until it actually happens. 2) If you "wait a year", you're likely either watching your investments grow or seeing them drop. Both are good to have happen before you retire! I'm not a big fan of delaying gratification unnecessarily, but the country is in some weird times financially. I'm generally extraordinarily optimistic, but I'm concerned these next few years might be...unbelievably different from what we've seen. Time will tell. Have a contingency plan in place for the what-ifs and have some fun!

I second the recommendation for a contingency plan as well as trying to realistically assess how you would feel if there were a bigger market decline. I'd highly recommend including a significant buffer in your budget and not relying too heavily on FIREcalc. If I were to compare my FIREcalc results from the time I retired recently and those from today, I'd get very different results. And we are living in unprecedented times.

I'd also suggest realistically assessing how you will feel if there are prolonged problems with the economy and a bigger market drop. Will you be trading one form of stress for another? Only you know how you and your family will feel. For me, it has been very different watching the market drop after retirement than it was watching it drop pre-retirement.

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Originally Posted by 2HOTinPHX Yes we have been keeping budget and track expenses on a spreadsheet for many many years. Current idea is to wait till the end of the year and maybe FIRE then. See if things look a little better by then as far as economy and world go. Still trying to learn best way to use funds and if Roth conversions should be considered in our plans. So far considering delaying my SS till 67 and wife takes hers at 62. So tough to plan for the unknown...

Keep in mind that your budget for the last few years will be of some use, but that you will need to add in for inflation and it is difficult to predict inflation at this point.

Plus, you mentioned that your pension is non-COLA. (So is mine.) That's very significant given the high inflation period we're in. Even if inflation goes down, I don't think all the prices are going to come down.

I think you're wise waiting until the end of the year. That not only will give you time to see how the economy is doing but it also will give you time to consider contingency plans and how you (and spouse) are likely to feel if you retire early with the knowledge that the economy might not be very rosy in your retirement.

[cnocmmz]

Yep agree with all. I retired the end of last year and it has been a whirlwind indeed. We are fortunate to have several retirement checks that are cola’d although we are in uncharted times and even with good pensions one gets unsettling nerves. Bottom line, if you do not have guaranteed income in early retirement, please take heed. All the best.

[cnocmmz]

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Originally Posted by militaryman Just a simple perspective, maybe too simple? SS at 67 is above $50,000 so all you need to ask is whether 850k can get you to 67 850,000/50,000(round up) equals 17 years which is more years than either of you has to reach 67 so you should be golden. The investment returns on the 850k should offset inflation and SS is adjusted for inflation yearly as well. Lots of pad in that calculation because you'll reach 67 in only 8 years and your wife in 12 so your nest egg should still be much in tact. This will help if SS doesn't get reformed to fix it's shortfall issue....

Last sentence says it all! Just make sure you have your expenses solid.

[2HOTinPHX]

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Originally Posted by RetMD21 Or you could do this. Take some money out of the traditional IRA but keep your income below the ACA threshold. Spend some of your cash. Your medical costs should be much less than what you have planned with the subsidy. With a younger spouse you want to be mindful of maximizing the social security survivor benefit. If you can hold out to 70 yourself and have her claim at 67 you maximize this. Most folks here are very excited about Roth conversions but if you keep your income to about $80,000 you pay no capital gains so you could just put the money a taxable investment account if you wanted.

So re-reading this thread I started and think about this reply. Would like to avoid Roth conversions if they are not cost effective at lower annual incomes.
Not sure which money below is suggesting putting in a taxable account? Are we talking about the current cash into a taxable investment count with some lower risk investments like brokered CD? So get 3% or so and pay no taxes in the end?

Most folks here are very excited about Roth conversions but if you keep your income to about $80,000 you pay no capital gains so you could just put the money a taxable investment account if you wanted.

[Koolau]

Quote:

Originally Posted by 2HOTinPHX So re-reading this thread I started and think about this reply. Would like to avoid Roth conversions if they are not cost effective at lower annual incomes. Not sure which money below is suggesting putting in a taxable account? Are we talking about the current cash into a taxable investment count with some lower risk investments like brokered CD? So get 3% or so and pay no taxes in the end? Most folks here are very excited about Roth conversions but if you keep your income to about $80,000 you pay no capital gains so you could just put the money a taxable investment account if you wanted.

Some advantages of Roth conversions come later. Once you are subject to RMDs, your taxes can get out of hand. This issue is even worse when one loses a spouse. YMMV

[2HOTinPHX]

So just thought I'd update where we are at in this situation. Been waiting to see if things calmed down some. Seems crazy is winning out to me. Not sure if trying to keep track of what's going on in the world today or going off grid and sticking head in the sand is a better plan?
Getting close to the end of year now and debating retiring now or continue to wait and see if things look more hopeful in 2023. I have enough vacation time accrued that if I put in two weeks notice on Monday it would be like getting paid thru the end of year. Wonder if this would be the best thing to do or wait till towards the end of the year and give two weeks notice then. Or continue to work in 2023 and wait and see if things start looking up for the world? I could probably do another 3 to 6 months at work next year but....... Knowing that every day at work is one less fun day for retirement.
Yes accounts are down but not that worried as still working so getting sale prices right?
Have been moving some cash around taking advantage of slightly higher rates.

Some questions come to mind.
How quickly can you get on ACA health insurance? If I gave two weeks notice next week. Would I be able to sign up right away?
If I wait and retire at the end of the year the accrued vacation payout would count towards 2022 income correct? So it would not be counted towards 2023 income which could affect ACA coverage cost. I have a lump sum pension payout from the frozen part of pension 30K plus 300.00 new plan monthly payment I was planning on as income for next year ACA income qualifications.

Is there a difference if I tell them I am retiring verse just quitting?
Don't want any kind of going away party or that sort of stuff. Working from home many many years now I barely know anyone in my team. No work friends to be missed. I am more of a just go quietly off into the sunset kinda guy....
So jump off the cliff in two weeks... end of year...or wait till next year? Any thoughts and suggestions appreciated.....

Sometimes it feels like my little video I posted on YouTube 5 years ago is getting too close for comfort.
https://youtube.com/shorts/fhscsnjzx8U?feature=share

[TripleLindy]

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Originally Posted by 2HOTinPHX Some questions come to mind. How quickly can you get on ACA health insurance? If I gave two weeks notice next week. Would I be able to sign up right away? If I wait and retire at the end of the year the accrued vacation payout would count towards 2022 income correct? So it would not be counted towards 2023 income which could affect ACA coverage cost. I have a lump sum pension payout from the frozen part of pension 30K plus 300.00 new plan monthly payment I was planning on as income for next year ACA income qualifications. Is there a difference if I tell them I am retiring verse just quitting? Don't want any kind of going away party or that sort of stuff. Working from home many many years now I barely know anyone in my team. No work friends to be missed. I am more of a just go quietly off into the sunset kinda guy.... So jump off the cliff in two weeks... end of year...or wait till next year? Any thoughts and suggestions appreciated.....

ACA enrollment is pretty flexible when you leave your job. There may be some implications if COBRA is offered, so be sure to look into that. We took advantage of COBRA for 18 months and then enrolled in an ACA plan mid-year when COBRA benefits expired.

As far as how you choose to leave, I doubt it makes any difference if you announce that you are retiring or quitting, but it’s worth discussing with your HR department once you’ve made your decision.

Good luck!

[Alex The Great]

2HOTinPHX, I'm in similar situation (but not the same). There is no vacation time for me (as we have so called unlimited vacation policy). And we're being called to work in office two days in a week right now. But ESPP will be distributed by the end of Jan and relatively small 6 month bonus most likely will be at mid-Feb. On other side, collect all income in 2022 and have 2023 clean. I plan to use Cobra because ACA cost will be as high with Roth conversions I plan to do.
For me, retirement in mid-Feb still seems a better choice even 2023 tax get more complicated.
I think what you can do is to list all pros and cons for each situation and then decide what's to do. You can use all vacation days first anyway, then decide.
I wonder how is overall situation at your work place? Many tech companies plan layoffs early next year. It may be beneficial to wait and collect the package.

[2HOTinPHX]

The company I work for is in the ocean transportation business. Things have been very good for our company the last couple of years. They just placed a billion dollar order for three new ships over the next 4 years so don't expect any layoffs anytime soon. On the other hand I have been seeing tons of news about freight rates dropping due to the economy slowing and less demand for imported goods. I was thinking there might be some layoffs if things continue their downward trend. They did that to us in 07. Said we were still making money but needed to look like we were being proactive to the shareholders.....so there is a chance of something happening. Monthly company wide townhall conference call on Monday so may learn something more then.
I should use up my vacation time but I feel like it just adds stress to everyones life if I am out and then to me to play catch up when I get back.... mental I need to get over... LoL.

[2HOTinPHX]

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Originally Posted by TripleLindy ACA enrollment is pretty flexible when you leave your job. There may be some implications if COBRA is offered, so be sure to look into that. We took advantage of COBRA for 18 months and then enrolled in an ACA plan mid-year when COBRA benefits expired. As far as how you choose to leave, I doubt it makes any difference if you announce that you are retiring or quitting, but it’s worth discussing with your HR department once you’ve made your decision. Good luck!

thanks for the reply.

[RetiredAndLovingIt]

In my case, I needed to be employed on the Dec 31st to qualify for the pension and profit sharing plan for that year. I also got a Christmas Bonus so didn't want to leave before then. We always had tons of folks quit the 2nd week of January, so much so every year we'd play the guessing game of who we expected to leave. ACA open enrollment is from now to January 15th. You could apply in January for coverage effective February 1st 2023. I would assume that the vacation payout would only count towards 2022 if it was paid out this year, that's a question for HR.

[2HOTinPHX]

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Originally Posted by RetiredAndLovingIt In my case, I needed to be employed on the Dec 31st to qualify for the pension and profit sharing plan for that year. I also got a Christmas Bonus so didn't want to leave before then. We always had tons of folks quit the 2nd week of January, so much so every year we'd play the guessing game of who we expected to leave. ACA open enrollment is from now to January 15th. You could apply in January for coverage effective February 1st 2023. I would assume that the vacation payout would only count towards 2022 if it was paid out this year, that's a question for HR.

Good points I will need to check with HR on.
Is quitting or retiring a qualified event for enrollment into ACA? Or do you always need to wait for open enrollment period? What about for spouse who is currently not working and on my work health plan?

[TripleLindy]

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Originally Posted by 2HOTinPHX Good points I will need to check with HR on. Is quitting or retiring a qualified event for enrollment into ACA? Or do you always need to wait for open enrollment period? What about for spouse who is currently not working and on my work health plan?

Yes, quitting or retiring is a qualified event for ACA enrollment - no need to wait for open enrollment. You’d be able to include your spouse with any plan you select. Depending on your income in retirement, your premiums may be very low.

[Alex The Great]

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Originally Posted by TripleLindy Yes, quitting or retiring is a qualified event for ACA enrollment - no need to wait for open enrollment. You’d be able to include your spouse with any plan you select. Depending on your income in retirement, your premiums may be very low.

I think it is worth to compare to Cobra. I have impression that in Phoenix area, ACA plans are quite expensive and majority of them may not cover some doctors or clinics. Anyway, it would be nice to hear from someone already on ACA in that area.

[brett]

Our approach was similar to many, but different. First off we knew that our lifestyle would change. And it did. We planned to downsize to a more travel friendly home, less maintenance, less everything. And one vehicle would definitely go. On the expense side we expected a significant increase in travel spending.

I took a tape of our total, after tax spend for the three years prior to early retirement. No breakdown, I did not care what was spent on food, dental, insurance, whatever. We added to that more money for annual travel.

I reviewed our sources of pension income with a view to identifying the gap between spend and income. SS, private pensions, etc. That gap, inflation, and a much larger travel budget were three items we looked at closely

Made a 10 percent adjustment for error. Assumed four percent inflation and six percent ROI on our investments.

The numbers popped out. I was not interested in the micro, only the macro on a yearly basis.

It has been eleven years. Miraculously my numbers held true and they were conservative despite many changes in our lives. For the past eleven years we have been doing the same. I take a tape on our monthly/annual after tax spend to compare to income from all sources. Do not care what we spend on insurance, utilities, food because it is what it is. That is not to say that I do not shop for insurance every so often to keep on top of rates because I do.

The one difference for our budget is that we do not have to concern ourselves with medical. It is covered. Not so with dental but this number was reflected in our pre retirement tapes. We were well ahead of things for the past ten years. We will be fine with inflation and a slight decrease in equity.

We are thankful that we took a very conservative approach. Looking back at the changes in our lifestyle we are glad that we did not get down into the weeds with every spend category because so much has changed. Today, we spend about half on property taxes, home mtce, insurance, and utilities than we did ten years ago. We did not anticipate such a spend decline. Our spend in a few other areas has been more that we might have anticipated or could anticipate.

[RetiredAndLovingIt]

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Originally Posted by TripleLindy Yes, quitting or retiring is a qualified event for ACA enrollment - no need to wait for open enrollment. You’d be able to include your spouse with any plan you select. Depending on your income in retirement, your premiums may be very low.

That's true as long as he goes straight to the ACA but if he accepts Cobra for any period of time even a month and then tries to move to the ACA then he will not be able to until the next open enrollment period. Last year they extended open enrollment for many months due to the ARP. It went all the way to August 15th which allowed a lot of folks including friends of mine to drop Cobra and jump onto ACA. I don't think that will happen this year though.

[2HOTinPHX]

Thanks for above replies. Good info....