I am done lurking

[boomer239]

Hello all,

Long time lurker and have really appreciated the knowledge/entertainment from reading all of the posts.

I believe I will be in the class of 2017.

Facts: I am 56, spouse is 54. I work for a megacorp and am currently at an executive position. My DW does not work outside the home; she is a degreed teacher but gave it up early on because my job made me so undependable and somebody had to take care of the house and kids. Said kids (two daughters) are now 30 and 28 and both have good jobs and are independent. Finances are below:

750k in 401k
360k in taxable brokerage accounts
25k in mine/spouse traditional IRAs (stupid move not to have started them earlier)
500k in company stock that vests on my retire date (this value is after taxes)
1.1M in SERP lump sum (I figure I will get 700k of that after taxes)

Pension is really good: 149k per year (before taxes, non-COLA)

SS will add about 25k per year eventually but not factoring that in.

I figure spending will be about 100k per year.

No debt except still owe 285k on a Marco Island, FL condo. I think I will just pay it off upon retirement for peace of mind reasons. Already own primary residence in Midwest. Both daughters are getting married within 6 weeks of each other in 2017 and I have 60k set aside for that (are you kidding me girls, really?).

My master plan is to invest in Vanguard index funds (Total Stock, Total Bond, International Stock, International Bond) and just let everything just reinvest in those funds. Basically, just live off the pension until inflation says I can't. Other taxable accounts will have blue chip dividend stocks that just reinvest also.

Firecalc says I can retire tomorrow but there are a few work things I want to complete at work (I know, stupid, but I don't want to feel like a "quitter" the rest of my life).

Anyway, put me down for October 2017!




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[Aerides]

someone will be along with the links to the main threads "can I retire" but other than that you do look good. Your closing statement however, - do you WANT to ER? You mention early you are an exec (many of us were) and you dont' want to feel like a quitter (few of us do). You might want to read the less financial threads and make sure you are ready. Are you retiring "from" or retiring "to"?

Let's pick a day: All you accomplish is returning a book at the library and picking up groceries, is it:

A) Busy, slow down there
B) Good, time in there for my afternoon latte and reading
C) Maybe one tomorrow and one the next day
D) Kill me now

[pb4uski]

Quote:

Originally Posted by boomer239 .... Firecalc says I can retire tomorrow but there are a few work things I want to complete at work (I know, stupid, but I don't want to feel like a "quitter" the rest of my life). Anyway, put me down for October 2017! ...

Quote:

Originally Posted by Aerides ... Your closing statement however, - do you WANT to ER? ...

Since the OP is a year away it is perfectly understandable for the OP to want to button up certain things before he leaves next October.

[gauss]

My only financial concern, which would not be reflected in FireCalc, is for your pension since it composes the largest component of your wealth. Do you know if it is covered by ERISA or not? If so do you know the funding level? If not, is the plan pre-funded at all or just pay-as-you-go for the employer?

Even if it were covered by ERISA, only a fraction of it (no more than about 33k/year for a 2016 bankruptcy) would be insured by PBGC under current law.

The other thing that I would scrutinize is your spending level of 100k/year. I would start tracking and categorizing all expenses in a tool like quicken if you are not already doing this.

I had over a decade's worth of this data showing my actual spending and which categories would go away in retirement. Having this live real-world data was priceless when making my ER decision.

Oh and lest I forget - Welcome to the community!

-gauss

p.s. My comments assume that you diversify out of your company stock holdings as well as your SERP immediately upon your retirement. If you don't do this you are further exaggerating the pension risk already described.

[MooreBonds]

It sounds like you are just about set and ready to go, based on the figures you presented. As gauss mentioned, what is the security/funding level/status of your pension plan? You list Ottawa as your residence, but mention having SS income as well - couldn't tell if you are a Canadian or American.

Also, are you planning on taking that built-up SERP out in one fell swoop, or are you able to transfer it to a tax-deferred account and slowly draw it down? Taxes could be a killer if you take that all out at one time, since (in the US) as your income grows, you suddenly are bestowed with not only higher taxes, but fewer exemptions/deductions, and also more chance of the AMTl (just one example: if your gross income > $250k when married, you "earn" the right to have 3.8% Medicare surtax applied to all dividends/interest).

Definitely do some calculations ahead of time to see what options you have, because you are literally talking about possibly avoiding 100,000++ in higher taxes just by spending a few hours doing different "what if" scenarios!

I see you also enjoy Marco Island. My parents took the family down there for every spring break since I was about 6, renting a different condo each time. They finally bought a home in 2000, but are getting ready to move back inland to Naples. Great place to relax and enjoy.

[brucethebroker]

Quote:

Originally Posted by Aerides someone will be along with the links to the main threads "can I retire" but other than that you do look good. Your closing statement however, - do you WANT to ER? You mention early you are an exec (many of us were) and you dont' want to feel like a quitter (few of us do). You might want to read the less financial threads and make sure you are ready. Are you retiring "from" or retiring "to"? Let's pick a day: All you accomplish is returning a book at the library and picking up groceries, is it: A) Busy, slow down there B) Good, time in there for my afternoon latte and reading C) Maybe one tomorrow and one the next day D) Kill me now

No to afternoon latte...caffeine kills my afternoon nap!

[boomer239]

Thanks for all of the feedback.

To respond to various posts:

I am a US citizen (vs Canadian).

SERP is required to be a lump sum (bummer), not allowed to be tax deferred. I will have to bite the bullet and pay 300-400k in taxes--ouch).

Pension is life-long annuity (lump sum not allowed).

Pension Plan is in good shape financially. Whether it stays that way or not is beyond my control. But, at least it has been paying for about 100 years, so probability is good it will continue.

I always liquidate stock awards once they vest to minimize exposure to the single point megacorp vulnerability. Thus, my megacorp exposure is limited to the pension.

I started some big projects within the last 5 years and they are all within 12 months of finishing. Mentally, I want to see them through. I know I don't have to but it would make me feel complete psychologically and enable me to walk away in 2017 and not look back.


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[Mdlerth]

Welcome to the forum.

Your numbers look foolproof. Also, the examples of many respondents here assure potential retirees that their plans are highly likely to turn out far better than forecast. Therefore, for someone in your position, the key question about retiring is not a financial one. So I will encourage you to listen to your heart, don't rush any decisions, and go when it feels right.

[MooreBonds]

Quote:

Originally Posted by boomer239 SERP is required to be a lump sum (bummer), not allowed to be tax deferred. I will have to bite the bullet and pay 300-400k in taxes--ouch).

Ouch! If you call it quits in October 2017, are you able to wait until Jan 2018 to take out your SERP? Is working until Jan 1 a possibility? Otherwise, if you have to take it in Oct 2017, your entire wages (and any stock awards) in 2017 will be hit up at a monstrous federal + state + local tax rate, compared to what you normally have taken out. Instead of paying your current tax rate, you are paying the top Federal tax rate, and giving up almost half of your wages to taxes. Are you able to take a "unpaid sabatical" or use up your sick leave to officially "still be in the company's system" until Jan 2018, when you then take out the SERP? Are you able to have any deductions taken out of your SERP payment? Maybe pre-pay COBRA for 12 or 18 months?

As far as your pension goes, I'd do at least a little checking of it. Just because it was around for 100 years, doesn't mean it's currently in a good funding state. I'd want to know if I can sleep soundly, versus possibly having to settle for a major reduction if PBGC has to take it over.

[pb4uski]

Actually, that is an interesting point. If you wait until 1/1/18 to quit so the SERP is 2018 income but you have no earnings that year will it make much of a tax difference for you?

[boomer239]

I should have been more specific on my official proposed retirement date. Early 2018 is my "official" retire date, however my "last work day" will be end of October 2017.

We are allowed to roll over 20 extra vacation days year to year if not used. Since I never come close to using them, I have my normal allotment plus the extra 20 each year. So my plan is to start the vacation burn in late October 2017, bridging until the end of the year, reload the normal vacation on January 1, 2018 and burn through that. That puts official retirement date in early February 2018.

It does help toward taxes on the SERP lump sum and also helps my final pension numbers a little bit.

So maybe I am a February 2018 person vs an October 2017 person. Regardless, last work day will be in October 2017.




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[Closet_Gamer]

Congrats on having such a rock solid plan. That pension is the stuff dreams are made of. Enjoy the extended pre-ER vacation!

[gauss]

Quote:

Originally Posted by MooreBonds As far as your pension goes, I'd do at least a little checking of it. Just because it was around for 100 years, doesn't mean it's currently in a good funding state. I'd want to know if I can sleep soundly, versus possibly having to settle for a major reduction if PBGC has to take it over.

I am still not clear if there is even any PBGC coverage for the pension.

PBGC only applies to qualified plans that are covered under ERISA. If he has some type of executive plan that is not covered by ERISA then there would be no PBGC coverage.

If it is a non-ERISA plan then there probably aren't any disclosure requirements about keeping members informed about funding level etc.

-gauss

[Shanky]

I was in a simular position to you in my late 40's. Was in the Auto Industry meltdown in 2009 timeframe. 7 figures of company stock worthless, SERP disappeared (Not protected in company bankruptcy), Pension went to the PBGC and will pay about 25%. I had to go to Silicon Valley for a few years to make up for this debacle. In the end it was a positive experience, and I still got to ER by 55, just instead of having too much money, we ended out with just the right amount.

[sengsational]

I didn't plug in the numbers, but it looks to me that one of your bigger problems is finding ways to spend more than 100K/yr.

[MBAustin]

Glad you're out from the shadows now, boomer! You have plenty of time to prepare, so check out these two resources that many of us find helpful:

http://www.early-retirement.org/foru...ire-69999.html

and

Early Retirement FAQs - Early Retirement & Financial Independence Community

Looks to me that you are FI, which is really the goal anyway. That gives you the freedom to RE when ready. So nice to hear of someone who is enjoying their last year on the job - many of us left with full BS buckets instead.