Hi Love this site! Some Friends and Family think I am crazy to think I can retire at 55 (class of 2016), but my bucket is full. They keep expecting more and more at Megacorp. I will be 53 this week and want to retire at 55 when Megacorp health plan kicks in for retirees with 75 points (55 and 20 years of service; I hit 20 years in 2014). I would consider the class of 2014 if not for the retiree health care. I am single, no kids and parents are FI, so its all about me. They say they are spending it all, so I don't plan any inheritance in my FIRE plan assuming they do. Current salary is $125K with bonus. I have calculated that I live on $33K a year after reviewing the last 18 months of spending (income tax and healthcare are not included as that is taken out of my take home pay, but includes essentials such maid and lawn care LOL). I also took out mortgage payments as the house is paid off as of 11/2011 (maybe shouldn't have done that and saved more cash / after-tax, but oh well its done now). I calculate I will increase spending to $51K ($43K essential which includes income taxes and health care, $8K discretionary for travel, entertainment, and unexpected expenses) from 55 to 59 1/2. I will have a low income tax rate as the income I will have will be some small dividends, interest on bank savings account, and income from farms I own ~ $7K. (This income will continue through retirement) Last year I maxed out my 401K / 401K Roth contributions and also saved 9% in an after tax account that is part of the options with the 401K plan. My concern is that I may not have saved enough in after tax / cash to fund the time from 55 to 59 1/2 without selling my current home in an Atlanta suburb right at retirement. I will probably sell it down the road though to move to lower cost of living location (not sure where). but don't want to be "forced" to do so right away. That is why this year I am not maxing out 401K contributions in order to build funds I can use to retire at 55.
I currently have $94K in cash in the bank and $12Kin a Roth IRA at same bank that makes very little (considering opening a Vanguard account and moving it there). My 401K has $600K with a plan to add 4% myself which Megacorp matches plus 6% Megacorp contribution for total of 14 % each year until 55 yo. I also have $7K in my 401K Roth and $12K in after-tax in Megacorp plan. In addition I have $180K in a tIRA from a roll over from previous Megacorp 401K at an Insurance /Brokerage company with a fee of 1% (I know I need to move that to Vanguard, too.) Based on FIRE, Financial Engines, and my spreadsheet I should be in good shape after 59 1/2 with conservatively $1.1 M 401K plus tIRA (assumed 6% growth, AA 75/25 and moving down to 65/35 at RE, 3% inflation, live to 90yo). I also have a non-COLA pension that I can take as a lump sum of $70K to invest or use for funding FIRE and pay the taxes at 55 (annuity is only $300/month). In addition I plan to take SS at 62, to keep withdrawals at 4% except for the 2 to 3 years from 59 1/2 to 62yo which will be more like 5%.
I have learned a lot from this forum and it has really helped me put together a robust Exel spreadsheet to plan to FIRE. That is what has lead me to be concerned about my funds to cover from 55 to 59 1/2. To cover FIRE until I can withdraw from 401K, what do I don? Do I forego 401K contributions beyond the 4% to get the match and put everything into the 401K Roth, the Aftetax fund, cash or what? In addition, do I roll over my current IRA to a Roth at Vanguards or what? Can I assume I can pull contributions from any Roths (IRA or 401K) at 55 without penalties? I should have around $34K each year for 2 years to invest somewhere. I just don't know what to do to help with expenses before 60. When I do sell my house and downsize I should have $200K to spend or invest after buying a smaller house, so that is still an option.
I currently have $94K in cash in the bank and $12Kin a Roth IRA at same bank that makes very little (considering opening a Vanguard account and moving it there). My 401K has $600K with a plan to add 4% myself which Megacorp matches plus 6% Megacorp contribution for total of 14 % each year until 55 yo. I also have $7K in my 401K Roth and $12K in after-tax in Megacorp plan. In addition I have $180K in a tIRA from a roll over from previous Megacorp 401K at an Insurance /Brokerage company with a fee of 1% (I know I need to move that to Vanguard, too.) Based on FIRE, Financial Engines, and my spreadsheet I should be in good shape after 59 1/2 with conservatively $1.1 M 401K plus tIRA (assumed 6% growth, AA 75/25 and moving down to 65/35 at RE, 3% inflation, live to 90yo). I also have a non-COLA pension that I can take as a lump sum of $70K to invest or use for funding FIRE and pay the taxes at 55 (annuity is only $300/month). In addition I plan to take SS at 62, to keep withdrawals at 4% except for the 2 to 3 years from 59 1/2 to 62yo which will be more like 5%.
I have learned a lot from this forum and it has really helped me put together a robust Exel spreadsheet to plan to FIRE. That is what has lead me to be concerned about my funds to cover from 55 to 59 1/2. To cover FIRE until I can withdraw from 401K, what do I don? Do I forego 401K contributions beyond the 4% to get the match and put everything into the 401K Roth, the Aftetax fund, cash or what? In addition, do I roll over my current IRA to a Roth at Vanguards or what? Can I assume I can pull contributions from any Roths (IRA or 401K) at 55 without penalties? I should have around $34K each year for 2 years to invest somewhere. I just don't know what to do to help with expenses before 60. When I do sell my house and downsize I should have $200K to spend or invest after buying a smaller house, so that is still an option.
