Hi, gregory r. here, planning in 4, sanity check required

[gregory r.]

Current:
* me - 54
* wife - 54
* combined salaries = $280k
* current pre-tax savings - $960,000 ( 40 stocks/28 bonds/32 fixed-reserves)
* after tax - $70,000
* house -will be paid off in 4, (double payments) assuming they continue
* 3 kids- 2 out of college & gone, 16 yo home college paid for through college trust
* condo in St Pete Beach Fl- paid for
* both 401ks we max out...plus catch up (the $960 above)
* my pension @ 62, it's frozen now w/benefit of $1700 mth
* SS at some point but need to weigh options.
- my calculation the pre-tax should be around $1.23 mill in 4 yrs & after tax around 100k, (emergency fund)..plan on working part time between 58 and 62 to cover medical and then some, and taking about 3.5% from investments. Hopefully the 3.5% combined w/part time income will suffice between 58-62, then the pension and possible one SS payment can kick in. I know i need to run the simulation and assess after tax spending before doing any of this.......just looking for insights or big misses in this "preliminary plan" I realize we'll possibly be hitting the investments a bit harder the first few years till the pension/SS kick in.....also realize we need to assess the SS and ramifications of taking one early.

 

[Meadbh]

Welcome Gregory. My first thought is surprise that you have only $1.03m investable assets at your age with a combined income of $280k. You have obviously put money into properties. You are hoping to live on 3.5% WR in the short term, so it is essential to do a detailed breakdown of your current and expected future expenses, including taxes. Expenses might be higher than you think.

 

[wingfooted]

Yes, living large which has impacted savings, particularly after tax accounts.

Your number is probably somewhere around $3MM - based on lifestyle expectations. Quite a ways to go....


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[braumeister]

I know i need to run the simulation and assess after tax spending before doing any of this.

You should be aware that FIRECalc (no reason you can't run this now) doesn't use "after tax" spending. Taxes are just another of your expenses in its calculation, so don't neglect that aspect.

Welcome to our board, where you'll certainly be able to get some good advice.

 

[retire2020]

My first thought is surprise that you have only $1.03m investable assets at your age with a combined income of $280k.

+1 Exactly my thought. What's your essential and discretionary expense? I would only quit after both expenses have been met with 4% WR and cutdown WR in bad return years to meet essential expense.

 

[gregory r.]

The plan is for no consumer debt in 4 yrs. (house, car, etc) Not so sure living large impacted us, more the 3 kids & 3 educations, we also haven't been making the $280k for that long, just where we are now. Big ticket was retirement condo, put our mortgage off a couple years, but it's paid for. Plan to downsize the MD house @ 59, spend 6 mths 1 day in FL. Hopefully working PT will off set some expenses. Agreed, detail expense analysis is required w/taxes included. We don't have toys, 6 yr old cars though, we do low budget activity, biking, kayaking, fishing locally, cheap H-hours, so lifestyle should be somewhat budget friendly. Thanks all for the input...will keep on saving big time

 

[38Chevy454]

It seems you are close. Your pension at 62 will help out a lot, plus you have SS that can start then or after 62. I assume your wife also gets SS.

What you did not state is what your expenses are. Once you have that, then you can figure out how to meet that required income level. You may need to take larger withdrawals before pension kicks in. Whether you need the extra part time work or not, you may be good to make it without in four years. Also depends on what happens with returns on the invested assets. I think you are a little too conservative, but each person has different risk tolerance.

Increasing after-tax savings is a good goal. You max out the pre-tax, and paying off house sooner, so good job on those areas.