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Hi, I am late enough that I am more of a FIR but need some help
09-24-2017, 11:43 AM
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#1
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Dryer sheet aficionado
Join Date: Aug 2017
Location: Santa Clara
Posts: 34
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Hi, I am late enough that I am more of a FIR but need some help
After getting into retirement planning really late due to a late in life divorce I have been winging it. I read everything I could find but it is all geared toward young people. A little bit of mentally playing charades, has led me to this forum. I may not be young in calendar years, but I will be in number of years worked when I retire. Now after this long lead-in, I am trying to find out what is missing, if anything, in my planning and hope to get your help in finding potential problems.
I am 66 and for the last 17 years I have been socking away over half of my income in one form or another. As a result I now have a fully paid of condo in the SF bay area and about $650k in savings. $460k is in a 401k and the rest in a Roth and a taxable account. My annual cash outflow is ~$28k and that number is pretty precise since I have tracked my budget for years. Assuming that I need to replace this income plus accounting for healthcare, between a small pension ($13k/year), SS and my 401k Firecalc gives me a 100% success rate if I retire in four years. However, I am afraid that I have a blindspot somewhere and am missing an obvious cost item.
Please help out a FIR (as an aging hippie I like that term) and throw out some possible problems
Before I forget, with my family living spread out across the world, annual travel is already part of my budget.
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09-24-2017, 11:50 AM
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#2
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Thinks s/he gets paid by the post
Join Date: Mar 2017
Location: New York City
Posts: 2,838
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Quote:
Originally Posted by Oma_here
I am 66 and for the last 17 years I have been socking away over half of my income in one form or another. As a result I now have a fully paid of condo in the SF bay area and about $650k in savings. $460k is in a 401k and the rest in a Roth and a taxable account. My annual cash outflow is ~$28k and that number is pretty precise since I have tracked my budget for years. Assuming that I need to replace this income plus accounting for healthcare, between a small pension ($13k/year), SS and my 401k Firecalc gives me a 100% success rate if I retire in four years..
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Welcome, What does firecalc give you right now? If we take things to the extreme and you work till your 90 you will also be at 100 %. So what does it say for age 67 and retiring?
What i found out too late in the game was, the 4 or 5 failures that firecalc gave me was if I retired at the very worst of times 1929, 1965,1966,1973 etc. You don't live in a bubble, if you see things going sour you will not blindly take out the next years COLA adjustment, you would tighten your belt and ride it out.
__________________
Withdrawal Rate currently zero, Pension 137 % of our spending, Wasted 5 years of my prime working extra for a safe withdrawal rate. I can live like a King for a year, or a Prince for the rest of my life. I will stay on topic, I will stay on topic, I will stay on topic
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09-24-2017, 12:07 PM
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#3
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Thinks s/he gets paid by the post
Join Date: Mar 2013
Location: Coronado
Posts: 3,706
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If you have $650K in savings and a pension of $13K/year, then Firecalc gives a 100% success rate for a 30 year retirement with a spending level of $35,883/year. Since your actual spending is much lower, I think you are likely good to go right now.
The extra $7K over your current expenses, plus the SS income, should be enough to cover the medical costs that aren't in your current budget.
You also need to look at any other big-ticket items that aren't included in that $28K and figure out how those would affect you. Special assessments from your HOA? Car replacement? Appliances? Dental work?
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09-24-2017, 12:30 PM
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#4
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Thinks s/he gets paid by the post
Join Date: Jun 2004
Location: Diablo Valley (SF Bay Area)
Posts: 2,705
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File for divorce SSA and you're good to retire now IMHO unless you're trying to build a legacy account outside property
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09-24-2017, 12:31 PM
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#5
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2008
Posts: 12,655
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Yes, this. What with tracking your expenses and turbo-saving, you seem like a very disciplined person, so I'm thinking you are well aware of periodic and emergent expenses. I found that being a pessimist in this area paid off, as we have had many more "emergent" expenses than we expected. I retired a couple years later than I originally planned, and saved like mad during those years - and the savings came in handy.
Quote:
Originally Posted by cathy63
I
You also need to look at any other big-ticket items that aren't included in that $28K and figure out how those would affect you. Special assessments from your HOA? Car replacement? Appliances? Dental work?
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__________________
If you understood everything I say, you'd be me ~ Miles Davis
'There is only one success – to be able to spend your life in your own way.’ Christopher Morley.
Even a blind clock finds an acorn twice a day.
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09-24-2017, 12:36 PM
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#6
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Dryer sheet aficionado
Join Date: Aug 2017
Location: Santa Clara
Posts: 34
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Gayl that unfortunately won't work since xH has few working years in the US. He would be eligible to file on my record since we were married for a long time, but I'm out of luck.
On the big ticket items not in my budget question: I left an account with ~$90k out of my Firecalc calculation to cover the need for a potential assessment/new car/appliances/etc. but I have no clue whether this is sufficient.
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09-24-2017, 12:43 PM
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#7
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2008
Posts: 12,655
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Only you can figure that out. I have to say that I didn't know how much "emergency fund" to have, either, and my estimates turned out to be way low anyway There is always the sense that one is keeping back too much $$ that ought to be invested for growth.
What many of our members do, is to project a low, medium, and high level of expenses, with the "low" being the absolute least they think they can stand to live on. They know that if lean times hit, they can ratchet back to that "low" level.
Quote:
Originally Posted by Oma_here
Gayl that unfortunately won't work since xH has few working years in the US. He would be eligible to file on my record since we were married for a long time, but I'm out of luck.
On the big ticket items not in my budget question: I left an account with ~$90k out of my Firecalc calculation to cover the need for a potential assessment/new car/appliances/etc. but I have no clue whether this is sufficient.
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__________________
If you understood everything I say, you'd be me ~ Miles Davis
'There is only one success – to be able to spend your life in your own way.’ Christopher Morley.
Even a blind clock finds an acorn twice a day.
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09-24-2017, 12:46 PM
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#8
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Moderator
Join Date: Jul 2010
Posts: 7,940
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Welcome oma! If you haven't found them already, we have a helpful list of things to think about as you contemplate picking a retirement date:
Some Important Questions to Answer
We hope you'll find helpful information so you can retire when you are ready!
__________________
"One of the funny things about the stock market is that every time one person buys, another sells, and both think they are astute." William Feather
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ER'd Oct. 2010 at 53. Life is good.
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09-24-2017, 12:59 PM
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#9
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Recycles dryer sheets
Join Date: Apr 2017
Location: SF East Bay
Posts: 155
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One possibility is to consider relocating to a lower cost of living area and tapping some of your condo equity. We are looking at the Sacramento and Reno areas - Bay Area is just too hectic for us these days. We visited DS yesterday in Chico and found very nice homes for $400K, lower sales tax rates and a college town atmosphere. Very tempting.
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09-24-2017, 01:27 PM
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#10
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Thinks s/he gets paid by the post
Join Date: Aug 2017
Location: Champaign
Posts: 4,722
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Welcome and WOW. How do you live on $29K/year in SF? If things really go south in the HC industry, we'll be paying close to that in HC premiums alone.
FIREcalc is a great tool coupled with a good tax accountant and maybe a few other professional opinions.
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09-24-2017, 01:34 PM
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#11
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Dryer sheet aficionado
Join Date: Aug 2017
Location: Santa Clara
Posts: 34
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Rianne, as I mentioned that number is net income, my condo is paid off and I despise shopping, so my daily life is quite low cost. Love to travel but with family in both Europe and Asia I have cheap "home bases" for a lot of places. I also travel with one of my sibs and we split hotel costs etc. and I do provide the same homebase amenities for family coming here so I am not leeching of them.
Also not SF proper, think more along the lines of within bicycle distance to Apple and Google --- though I work at neither and I refuse to ride a bike in the traffic here
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09-24-2017, 08:21 PM
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#12
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Moderator
Join Date: Jul 2017
Posts: 5,767
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What is your estimated SS income? What will you need to pay out of pocket for medical, dental, vision? I will say however, I do NOT think that you could improve much on what you are doing in any event. You have upped your savings rate, paid off your condo, and cut costs to the bone. Best of luck to you OMA and great job!
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09-24-2017, 08:24 PM
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#13
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Thinks s/he gets paid by the post
Join Date: Jun 2004
Location: Diablo Valley (SF Bay Area)
Posts: 2,705
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Oma, benefitting from Prop 13? (Another SF bay resident who is ... )
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09-24-2017, 10:31 PM
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#14
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Dryer sheet aficionado
Join Date: Aug 2017
Location: Santa Clara
Posts: 34
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Prop 13 is indeed my friend and a reason for not selling.
Another reason is that my youngest and his family moved to Europe this spring. Should they decide to stay, and I have seen decisions like this go both ways, I may well decide to move to one of the Schengen countries to be closer to most of my family. Portugal comes to mind, not terribly close by but not a 10 - 11hour flight away either. As a citizen of one of the Schengen countries I won't need a visa for this. I'll make that decision in a few years. For now my assumption is that I will stay here and plan accordingly.
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