Join Early Retirement Today
Reply
 
Thread Tools Display Modes
Final Approach - just looking to chat
Old 05-16-2013, 11:29 AM   #1
Recycles dryer sheets
 
Join Date: May 2013
Posts: 307
Final Approach - just looking to chat

My wife will be retiring at the end of Sept this year and I will be retiring in Jan of 2014. My wife will be 49 and I will be 48 at our respective retirements. We were originally going to retire several years ago, but after the last couple of stock market events, I wanted a bigger cushion. And quite frankly a good deal of my identity seems tied up in what I do for a living so I had to come to terms with the loss of that part of myself. I'm going to work on open source software in retirement. At least that's what I will do when I feel the need to spend quality time with a computer. No pay, no politics and control over what I contribute to. We own an RV and will probably camp a lot also.

While I am a fairly comfortable investor, I seem to like being over prepared. In 1992 the first paragraph of our first financial plan stated that social security was going to collapse and that the company was going to embezzle our pensions. The plan was that we had to do everything ourselves. Today I assume the pensions are okay but am assuming SS will change to means based testing, which means we won't qualify. I am a serious Boglehead. Low cost index funds rock. 60%stock/30%bond/10%cash is where I intend to start retirement.

I work as a software engineer and my wife is in accounting with the same company. We have both worked here almost since college.

We will retire with investments that add up to about 40 times our actual annual expenses. Our initial spend should be close to 2.6% of our invested net worth. At 55 we both begin collecting pensions. The initial payout of those pensions is equal to about half of our annual expenses. Pensions accrued money based on what we made, not how much we spent. So 6-ish years after retiring our spend from investments will drop significantly.
gozer 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 05-16-2013, 11:34 AM   #2
Recycles dryer sheets
chilkoot's Avatar
 
Join Date: Apr 2013
Location: The sticks
Posts: 314
Congratulations, gozer!
chilkoot is offline   Reply With Quote
Old 05-16-2013, 12:18 PM   #3
Moderator Emeritus
Bestwifeever's Avatar
 
Join Date: Sep 2007
Posts: 17,773
I think you are cleared for landing!
__________________
“Would you like an adventure now, or would you like to have your tea first?” J.M. Barrie, Peter Pan
Bestwifeever is offline   Reply With Quote
Old 05-16-2013, 12:32 PM   #4
Thinks s/he gets paid by the post
 
Join Date: Mar 2004
Posts: 3,431
Welcome aboard, Dozer. Sounds like you've done well and are on the final approach for a safe landing.

omni
omni550 is offline   Reply With Quote
Old 05-16-2013, 01:16 PM   #5
Thinks s/he gets paid by the post
Ready's Avatar
 
Join Date: Mar 2013
Location: Southern California
Posts: 3,995
It sounds like you've thought this out very carefully. Now all you have left to do is make sure you have enough activities to fill up the day, since you'll have a long retirement ahead of you at your age. Good luck and congratulations!
Ready is offline   Reply With Quote
Old 05-16-2013, 02:52 PM   #6
Confused about dryer sheets
 
Join Date: Jan 2005
Posts: 2
Great job.
LuxoDave is offline   Reply With Quote
Old 05-16-2013, 05:24 PM   #7
Full time employment: Posting here.
 
Join Date: Apr 2006
Posts: 969
Quote:
Originally Posted by gozer View Post
...I'm going to work on open source software in retirement. At least that's what I will do when I feel the need to spend quality time with a computer. No pay, no politics and control over what I contribute...
Admirable goal; but, you may be disappointed with the no politics expectation if you work on one of the larger projects.

Regardless, good luck and welcome aboard.
__________________
If there's one thing in my life that's missing; It's the time I spend alone
Sailing on the cool and bright clear waters; There's lots of those friendly people
Showin me ways to go; And I never want to lose your inspiration
CoolChange is offline   Reply With Quote
Old 05-16-2013, 05:40 PM   #8
Thinks s/he gets paid by the post
heeyy_joe's Avatar
 
Join Date: Nov 2012
Location: Madeira Beach Fl
Posts: 1,403
Are you late everywhere you go?
__________________
_______________________________________________
"A man is a success if he gets up in the morning and goes to bed at night and in between does what he wants to do" --Bob Dylan.
heeyy_joe is offline   Reply With Quote
Old 05-16-2013, 06:07 PM   #9
Thinks s/he gets paid by the post
Onward's Avatar
 
Join Date: Jul 2009
Posts: 1,934
All systems go! Congrats.

Quote:
Originally Posted by CoolChange View Post
you may be disappointed with the no politics expectation
Yes. Don't want to harsh your mellow, but if there are humans involved, there will be politics.
__________________
And if I claim to be a wise man, it surely means that I don't know.
Onward is offline   Reply With Quote
Old 05-16-2013, 06:30 PM   #10
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: 36,264
Congratulations. You seem well prepared. I'm less pessimistic than you are on SS, but it will be gravy for you if I am right.
__________________
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 05-16-2013, 07:20 PM   #11
Recycles dryer sheets
 
Join Date: Dec 2011
Location: Chicago area
Posts: 431
Great job, gozer.

I also commit on a few OS projects. It is wonderful to pick when, where and how I contribute. The trick for me is picking the projects with communities that match my own values and style. Otherwise I spend too much effort beating my head against the wall.

AIR
AnIntentionalRoad is offline   Reply With Quote
Old 05-16-2013, 07:47 PM   #12
Moderator Emeritus
Rich_by_the_Bay's Avatar
 
Join Date: Feb 2006
Location: San Francisco
Posts: 8,827
I may have missed it but what are your plans for obtaining and paying for health insurance?

And by the way, nice going on the assets and plans. They look good to me.
__________________
Rich
San Francisco Area
ESR'd March 2010. FIRE'd January 2011.

As if you didn't know..If the above message contains medical content, it's NOT intended as advice, and may not be accurate, applicable or sufficient. Don't rely on it for any purpose. Consult your own doctor for all medical advice.
Rich_by_the_Bay is offline   Reply With Quote
Old 05-16-2013, 08:39 PM   #13
Recycles dryer sheets
 
Join Date: May 2013
Posts: 307
Quote:
Originally Posted by Rich_by_the_Bay View Post
I may have missed it but what are your plans for obtaining and paying for health insurance?

And by the way, nice going on the assets and plans. They look good to me.
We were considering a fairly high deductible type health plan shopping around on Health Insurance - Find Affordable Health Insurance Plans and Buy Medical Coverage Online. Insurance is for catastrophic expenses.

We also both already have long term care insurance.

The ACA and the health exchanges next year have thrown a monkey wrench into things. For the first six years after I retire most of the money I will be spending, unless I change things, is from a Tax Free municipal bond fund that has very small unrealized gains and stock ETFs that only have about 40% unrealized gains. I'm also still carrying about a 40K capital loss from the last market event. For at least some of the first six years my income will actually be below the poverty line. I don't plan on touching actual retirement accounts until my wife hits 59.5 years old. Using a 72(t) exception to get at IRA accounts with no penalty is a remote plan B. And our pensions don't both kick in until 2020.

So next year for example, if I sell 100K from the bond fund only about 3K is taxable long term gains. That fund also throws about 14K per year in non-taxable dividends. Add in 12K from the stock funds (gains and dividends) and I get 15K taxable income before deductions. I believe that means I would not qualify for any price breaks on the health exchanges. Income is too low. This fund is really not appropriate for the tax bracket I will be in after retiring so this may change to a taxable bond fund which might fix the too low income issue.

By comparison if I sell 100K from one of the stock ETFs I would have about 40K in taxable long term gains, plus what ever gains and dividends the ETF shares that were not sold throw off. That is above the poverty line for my size family but should be below 400% of the poverty line. So I would qualify for price breaks on the health exchanges.

I still have a lot more research to do. I'm hoping the details get better before I have to make the call on what we are doing. Without better information I would stick with the original plan and avoid the health exchanges.
gozer is offline   Reply With Quote
Old 05-16-2013, 10:29 PM   #14
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Nov 2009
Posts: 6,682
Gozer, although I am single our ER plans have some similarities. First, when I ERed in 2008, the ratio of investments to annual expenses was just over 40:1 (and has since risen to more than 50:1 with market recoveries since late 2008). My SWR is in the 2-2.5% range.

What I have done, and it may be helpful to you, is to split my ER plan into 2 parts. The first part, the more challenging part, is to plan my long-term budget between when I ERed and age ~59.5. It is age 59.5 when I begin to gain unfettered access to my IRA, the first of my "reinforcements" including Social Security and my frozen company pension I can tap into a few years after that. I have vastly different AAs in these two accounts because the taxable accounts are income oriented (2/3 bond funds) while the IRA is more growth oriented (50/50).

Health insurance has always been the wild card, as my original individual HI policy's premium grew by 50% in just 2 years (so I dropped it and took on a bare-bones policy not permissible under the ACA)! But the ACA got passed since I ERed so that will help me a lot in making a broader HI policy more affordable.

I think you are in good shape, too.
__________________
Retired in late 2008 at age 45. Cashed in company stock, bought a lot of shares in a big bond fund and am living nicely off its dividends. IRA, SS, and a pension await me at age 60 and later. No kids, no debts.

"I want my money working for me instead of me working for my money!"
scrabbler1 is online now   Reply With Quote
Old 05-17-2013, 07:20 AM   #15
Recycles dryer sheets
 
Join Date: May 2013
Posts: 307
Quote:
Originally Posted by scrabbler1 View Post
What I have done, and it may be helpful to you, is to split my ER plan into 2 parts. The first part, the more challenging part, is to plan my long-term budget between when I ERed and age ~59.5. It is age 59.5 when I begin to gain unfettered access to my IRA, the first of my "reinforcements" including Social Security and my frozen company pension I can tap into a few years after that. I have vastly different AAs in these two accounts because the taxable accounts are income oriented (2/3 bond funds) while the IRA is more growth oriented (50/50).
Does seem similar. I look at my retirement assets in two piles; taxable investments and tax deferred investments.

The taxable investments are my pre IRA age stuff and tax deferred is post. I ran two retirement scenarios. Taxable spend down between 2014 and 2024. Very likely to have significant taxable assets left over at the end. But there are a small number of scenarios where I would exhaust these assets. The tax deferred spend down happens between 2024 and 2060. The later of these two actually looks far more likely to be net worth growth rather than spend down. At least up to 2060. 2060 is when I plan to drop dead or become a burden on society.
gozer is offline   Reply With Quote
Old 05-17-2013, 07:53 AM   #16
gone traveling
 
Join Date: Feb 2008
Posts: 510
Quote:
Originally Posted by gozer View Post
I look at my retirement assets in two piles; taxable investments and tax deferred investments.

2060 is when I plan to drop dead or become a burden on society.
I also look at two piles, but it still far for us to think about the ER unless we're forced into it.

Add another 5 years to round up to the nice age of 100...kidding. You sound prepared very well and a Boglehead to boot. I'll need to check if 'gozer' is there when I visit BH next time.
aida2003 is offline   Reply With Quote
Old 05-17-2013, 08:44 AM   #17
Recycles dryer sheets
 
Join Date: May 2013
Posts: 307
Quote:
Originally Posted by aida2003 View Post
I'll need to check if 'gozer' is there when I visit BH next time.
I don't participate in that forum, I hide in the corners. I was in the Motley Fool early retirement and LBYM forums for about 18 years. (different screen name) I managed to post about a dozen times. You gotta pace yourself for the long haul.

Since work is beginning to wind down I am looking around for people that have the same kind of crazy I do.
gozer is offline   Reply With Quote
Old 05-17-2013, 09:58 AM   #18
gone traveling
 
Join Date: Feb 2008
Posts: 510
Quote:
Originally Posted by gozer View Post
I don't participate in that forum, I hide in the corners. I was in the Motley Fool early retirement and LBYM forums for about 18 years. (different screen name) I managed to post about a dozen times. You gotta pace yourself for the long haul.

Since work is beginning to wind down I am looking around for people that have the same kind of crazy I do.
When you're ER, I hope you'll contribute more because you understand all this stuff, IMO plus you'll have your toes wet.
MF is not popular with me anymore. I think it changed when they started selling advice on stocks and funds and wanted to charge for forums...It's been awhile that I recall this very vaguely. Not sure if their forums have stayed active/great or not anymore. I used to visit retirement planning and DRIP communities.
aida2003 is offline   Reply With Quote
Old 05-19-2013, 03:37 AM   #19
Thinks s/he gets paid by the post
obgyn65's Avatar
 
Join Date: Sep 2010
Location: midwestern city
Posts: 4,061
It looks like you are set. Congratulations.
__________________
Very conservative with investments. Not ER'd yet, 48 years old. Please do not take anything I write or imply as legal, financial or medical advice directed to you. Contact your own financial advisor, healthcare provider, or attorney for financial, medical and legal advice.
obgyn65 is offline   Reply With Quote
Old 05-19-2013, 07:05 AM   #20
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: 36,264
Quote:
Originally Posted by gozer View Post
.....The ACA and the health exchanges next year have thrown a monkey wrench into things. For the first six years after I retire most of the money I will be spending, unless I change things, is from a Tax Free municipal bond fund that has very small unrealized gains and stock ETFs that only have about 40% unrealized gains. I'm also still carrying about a 40K capital loss from the last market event. For at least some of the first six years my income will actually be below the poverty line. I don't plan on touching actual retirement accounts until my wife hits 59.5 years old. Using a 72(t) exception to get at IRA accounts with no penalty is a remote plan B. And our pensions don't both kick in until 2020.

.....Without better information I would stick with the original plan and avoid the health exchanges.
I don't think you want to do stick with your original plan and stay below the poverty line because then you will be on Medicaid because your income is so low. As I understand it, individuals will not be able to buy health insurance except from the exchanges and if your income is too low then you will be put on Medicaid.

I think you are right that now that you are not working that the muni bonds no longer fit your situation.

I have my fixed income allocation totally in our tax-deferred accounts and my taxable accounts are all stock which generate qualified dividends and capital gains. The dividends and capital gains count for ACA but are tax-free as long as I keep my taxable income below the top of the 15% bracket. Actually, I'll plan to manage my accounts (through taking or not taking capital gains) so my income is below 400% FPL (and possibly far below 400% FPL but certainly above the Medicaid level).
__________________
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
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


» Quick Links

 
All times are GMT -6. The time now is 12:14 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.