Hi, I’m Fuzzy from CT

[kurtzoe]

DW and I are 60 and looking forward to retiring ASAP. I’ve been in sales and DW is a teacher:

The assets:
$1.675M portfolio (will roll 500k of this into wife’s pension to increase annual payout)
With this rollover DW pension will be:
• 30k annually cola’d
• 43k annually non-cola’d (this is from the rollover)
• I am protected on 67% of this if DW predeceases me
My SS will be 25k per year starting in 2019
DW is not SS eligible
Owe 40k on mortgage
Practically debt free but for a car payment of $400 for 2.5 more years
Remaining portfolio will be $1,135M after paying off mortgage and investing in DW pension as above

The expenses:
60-65 106/year
65-75 92/year
75+ 88/year

I can’t say that I have been tracking this carefully but went through all 2016 spending last year and this is what I estimate. (getting this right is the part that concerns me the most)

Is there a way to plug these values into Firecalc? I’m afraid that the Bernicke’s model is too aggressive and I’m trying to be as conservative with this modeling as possible. I therefore used the constant spending model.

The results:
With-
• $1M portfolio (1.675k minus 500k for the pension buy up, 40k for the mortgage buy off and 135k to make up for lost income until SS kicks in; along with other misc. expenses, car replacement etc.)
• 98k annual spend
• Constant spending power
• 100k withdrawal in 2020 (for wedding expenses that may or may not come)
• 1% investment fees
• Pension and ss income as listed above
• 70/30 equity to fixed income mix

100% success rate-
I think I’ve done this very conservatively but I’m not sure I have the spend right. I have 24.5k in annual taxes in my expense number. 5.5k of that is property and the rest income. I do foresee ultimately leaving CT which taxes SS & pension income for maybe PA which does not.

Health care I have at 19k till 65 then dropping to 6k when Medicare kicks in and I only have to buy a supplement.

Feedback please…….

 

[MBAustin]

Welcome kurtzoe (or do you prefer Fuzzy?). If you haven't found them already, we have a helpful list of things to think about before you make the leap:

https://www.early-retirement.org/forums/f47/some-important-questions-to-answer-before-asking-can-i-retire-69999.html

There are other folks here who are more equipped to answer your Firecalc questions than I am.

Out of curiosity, how did you pick $500k as the amount to put into DW's pension account?

If ASAP means at the end of the school year, you don't have much of an opportunity to get a better handle on your expenses, so it will be important for you to track things very closely the first couple of years to validate your assumptions or adjust accordingly.

Also, you don't mention your asset allocation on the portfolio, which will be an important factor in your success. Many of us would also use low-expense funds to keep the investment fees below 1%.

Hope this is somewhat helpful.

Oh, and feel free to join the Class of 2017!

 

[ProspectiveBum]

The expenses:

60-65106/year

65-7592/year

75+88/year

I'm a little unclear on the breakdown here. Is this what you expect your expenses to be in each age band? E.g. At 60 you'll be spending $65K, at 65 you'll be spending $75K, and at $75 it'll be $88K?

Further down you mentioned a $98K per year spend, so I'm confused.

Without knowing that piece, my only other comment is on the planned $100K withdrawal in 2020. Is that coming from an after-tax account? If not, I'd probably want to look into spreading that withdrawal over a few years to stay out of the highest tax bracket.

 

[kurtzoe]

Thank you for the replies to date

MBAustin:
The 500k value is the value of what is in DW 403b and what is eligible to be rolled into the pension.
The investment mix (virtually all in tax deferred accounts) is in mutual funds 60/40 equity/fixed income. I am thinking of getting a bit more aggressive than that to 70/30 after I move the 500k inot DW pension. I think the fact that I will have pension and ss income of 100k+/- allows me to be a bit more aggressive with the remaining $1M portfolio.

Agree on the investment expenses but keeping it there now for reasons I have. Will adjust that after my transition.

ProspectiveBum:
The budget is in those age bands but you did not read it correctly. It is:
106/year from now until 65
92/year from 65-75
88/year from 75+

Good advice on the 100k withdrawal. Tough to forecast these things but agree a withdrawal strategy is better than taking that lump sum all at once.

Great comments, thanks

 

[Bestwifeever]

How does the outcome look if you take your SS out of the equation (if you get run over by a bus tomorrow, "DW is not SS eligible"--will your DW be eligible for any survivor benefit?)? And you would lose 1/3 of her pension if she gets hit by the bus tomorrow--does that affect your success rate?

Welcome to the boards!