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Hi, from Chantilly, VA!
Old 03-27-2011, 09:06 AM   #1
Confused about dryer sheets
Join Date: Mar 2011
Location: Chantilly, VA
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Hi, from Chantilly, VA!

Good morning, All!

I found this great forum just recently - wish I had thought to look for it sooner!

I am a 56 year old systems engineer in Chantilly, VA. I retired from the USAF in 1996, but have to share my retirement income from that career with my 1st wife, leaving me with ~$19K/year (taxable) from that. I am looking to retire from my second career as a government consultant within the next year - retire-retire, that is, to enjoy my hobbies (R/C aircraft, golf, etc.). I am married to a younger woman, 12 years my junior, have one older son from my first marriage (married himself with two kids - independent), a 12 year old daughter, and a 9 year old son, both of which have pre-paid education plans going (VPEP). I have ~$1.75M in a 401k, but that's about it as far as investments go. Our current employer (we both work for the same company) is a very generous contributor (regularly exceeds 10%) to our 401k plans through T. Rowe Price. We live in Chantilly, VA, in a ~$600K home with about $500K mortgaged. I make about $180K/year and my better half makes about $100K/year working 30 hours/week.

So, what do you think, folks? Can I reasonably expect to be able to stop work at this point? I don't know if I can keep pace with the hours and travel required by my current position and I'm very much looking forward to a less stressful existence. My wife is uncertain about continuing to work - she has had limitations along her career path and I'm supportive of her pursuing that, but I think the prospect of not having to work appeals to her as well. We've already been informed by our daughter that she very much wants to graduate from her current HS, so we'd like to avoid having to move from one of the highest cost of living areas in the country for another 5 years.

Recent events at work have triggered a keen interest in pursuing retirement sooner rather than later, so any advice from this forum will be greatly appreciated!

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Old 03-27-2011, 09:47 AM   #2
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Location: Green Valley
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Step one on your journey, I would suggest, would be to create a budget. Once you know how much you spend then you can use firecalc to forecast various scenarios.

Looks like you've done well on the saving front - congrats!
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Old 03-27-2011, 10:21 AM   #3
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Welcome aboard. Sounds like you're well on the way if not already FI, congrats! But without knowing your retirement expense budget among other things, we can't give you a meaningful answer.

If you want a rule of thumb, a nest egg of at least 25X your annual unfunded expenses (unfunded expenses/yr = total expenses/yr - income sources/yr from pensions, SS, rental, etc.) in current dollars should put you in the ballpark. IOW if you expect to spend $50K/yr and you have a $25K/yr pension, you might target $625K ($25K/yr x 25) to retire at age 65 with a high probably of success to age 95.

Some would say more like 35X at your age, 25X is meant for someone with a 30 year retirement horizon.

But instead of sharing more info, here's where most people here will probably tell you to start, a great tool FIRECalc: A different kind of retirement calculator. Always a link available on the right hand side of this forum too. Best of luck...
No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57

Target AA: 50% equity funds / 30% bond funds / 20% cash
Target WR: Approx 2.5% Approx 20% SI (secure income, SS only)
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Old 03-27-2011, 10:27 AM   #4
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Welcome! I found that the FIRE calc gave me peace of mind when I was unsure about our own retirement in 3 years or so.
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Old 03-27-2011, 10:41 AM   #5
Confused about dryer sheets
Join Date: Mar 2011
Location: Chantilly, VA
Posts: 4
Wow! What great support I've found here! I truly appreciate the fast responses!

I agree that a budget is the best place to start and I've got a draft in work. And I'll check out FireCalc soonest!

Thanks again!
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Old 03-27-2011, 12:04 PM   #6
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Things to think about:

1. How do you live between now and when you are 59 1/2. If you retired now do you meet the requirements to take from the 401k before 59 1/2. That is assuming you and your wife both retire.

2. What are your living expenses? DH and I had a little higher income, similar mortgage and a little less assets. We determined that the key to retirement was reducing expenses. I am typing this sitting in my chair waiting for the movers to come take it from me as we are closing on the sale of that house with the big mortgage tomorrow. We are downsizing to something that will cost much less. We were willing to reduce our living standard to retire sooner. Not everyone wants to do that.

3. Healthcare. How will you get it if you retire?

4. Run Firecalc.
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Old 03-27-2011, 01:58 PM   #7
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If I'm adding correctly, when your daughter is a senior in HS, your son will be a freshman--it might be hard on him to move then (since you seem to have decided to say put until the presently 12-year-old daughter graduates from high school, your son will be what, 15?, at that point--might that extend your commitment to "one of the highest cost of living areas in the country" for a few more years?).

Your hobbies sound fun but expensive--don't forget to budget generously for them and for your DW's.
“Would you like an adventure now, or would you like to have your tea first?” J.M. Barrie, Peter Pan
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Old 03-27-2011, 06:37 PM   #8
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Here's a quick way to look at it. Your numbers are a little low on detail in the expense area. So here goes: You have 1.75million invested for retirement, and a 500k mortgage. Mortgage sounds like your annual payments would be around 30k. If you assumed a 3% SWR (33x expenses - similiar to Midpack's suggestion of 35x), then you have 52.5k + 19k = 71,500 income pre-tax. Assume perhaps 10% tax, and you have 64k left to spend. Then you have that mortgage of 30k, leaving you 34k. What about property tax, property insurance, health insurance, and accruals for replacement vehicles?

So, in my opinion, you're not quite there yet, UNLESS:

1) DW continues to work for a while
2) you move to a less expensive location with cheaper housing. I would not retire with a 500k mortgage and the amount of savings/retirement income you have...but that is me.

I think your first priority should probably be to understand your expenses very well (including accruals for capital intensive goods etc). Once you have that under control, see how it matches up with your income.

Good luck, let us know how it goes.

Find Joy in the Journey...
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