I'm thinking of retiring this year... thoughts or comments?

[jzajzz]

Quote:

Originally Posted by flyingaway Does anyone thing an expected annual market return of 7~8% a little bit rosy?

yes .. it's attainable.. but you shouldn't plan on a 7-8% .. always plan conservatively... if you do get a better return ..then great.

[cnocmmz]

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Originally Posted by mistermike40 Hi cnocmmz - yes we are very close... same age, though your DW has been employed while mine has been a (fantastic) housewife and mother over the years. When you ran FIRECalc, did it indicate $125k using Constant Spending or with Reality Retirement? In an earlier post you mentioned $6200/month if you walked away today... is the FIRECalc number above reflecting Dec 2018 status? The most important thing I've learned from this forum is to fully understand your expenses (your needs), and after that your wants/expectations in retirement. Last night I reviewed my past five years of spending (I keep a detailed monthly spreadsheet) and looked at worst-case for each category. I removed the mortgage (keeping the taxes/insurance) and put in my increased healthcare premium. It comes out to about $37k a year (this would be my "needs"). I'm confident I can start with $80k+ in retirement, decreasing slightly as I get older. This will net (after taxes using latest 2016 tables) over $65k post-tax... basically $30k discretionary income (more than I have today). Me and DW are frugal by nature (though we did spend a lot on the kids growing up... trips, camps, lessons, etc) and can adapt and spend less if required during bear markets. I suppose everyone is nervous prior to formally snapping the string and entering retirement. To me, your numbers look very healthy (I suspect over 90% of the population would be envious of your financial position!). I think it boils down to whether your basic needs are covered (yours certainly would be) and then how you feel about the carrot of One More Year... your retirement situation will be better a year from now... even better in two years... better yet in three years. Only you can decide when "enough is enough". I empathize with your 40 years... I've been doing the same job for well over 30 years. To me the OMY carrot isn't enough anymore... I've had several family and friends pass away very, very early in retirement. I'm in relatively good health but you never know. I'm planning for 35 years and trying to make sure that's covered... while at the same time not working longer than needed to cover that period. I keep thinking, each additional year of working full-time at Megacorp is one less year of healthy retirement. Which if I need it, fine - it's the right thing to do. But I don't plan to work 5-10 years longer than necessary just to build a $5M+ nest egg that I will never spend. It's not a contest or competition

'Yes I used 125K as a constant, however, I will really only need 90K I think.
-$6200/month if you walked away today... is the FIRECalc number above reflecting Dec 2018 status? "Yes, I just put 2018 so I am hoping this is all correct". We Gross about 165K now but after the net it is barley over 100K and I would to live relatively the same and hopefully a less tax burden.
-My immediate thoughts on your situation is to be patient and go work everyday thinking it may be your last day and although your work is important I would NOT stress out and just take it week per week. If you could hold out 1-2 more years things may be a lot different financially?

[cnocmmz]

Quote:

Originally Posted by flyingaway Does anyone thing an expected annual market return of 7~8% a little bit rosy?

Yes, I would expect a bit rosy, depending on how you use it ? For instance, I plan using a 4-5 % Growth in retirement just to be safe

[mistermike40]

Thanks to everyone who replied to my original post... I appreciate everyone's thoughtful opinions. I still have a month or so to decide but I'm almost certain I'm going to retire at the end of this year. I've accounted for every conceivable expense and I've run the numbers through many online calculators plus my own spreadsheets... and every scenario I wind up with at least $30,000 per year over my total expenses. Even if somehow I'm missing something big or if the market really underperforms I should still have enough cushion to be more than OK. Working longer will almost definitely only increase my children's inheritance... it will not change the quality of my retirement at all.

[cnocmmz]

Well, I see you have made up your mind to retire years end. Good for you[emoji3]
I just realized now that I have been tracking expenses that I made 184k last year and really only lived on about 75k. I guess between taxes and investments and savings there is the rest. Our retirement pensions is about that so we should be fine. I will track for a few more years to ensure we are good. Again, congrats on your decision to ER.[emoji3][emoji106]

[mistermike40]

Quote:

Originally Posted by cnocmmz Well, I see you have made up your mind to retire years end. Good for you[emoji3] I just realized now that I have been tracking expenses that I made 184k last year and really only lived on about 75k. I guess between taxes and investments and savings there is the rest. Our retirement pensions is about that so we should be fine. I will track for a few more years to ensure we are good. Again, congrats on your decision to ER.[emoji3][emoji106]

Hi cnocmmz - I'm about 95% certain Two things really jumped out at me as I was studying the numbers... saving/investing and taxes. Saving goes to zero (unless we decide to spend less that year) and taxes are *much* lower. Combine that with the expense of going to work (gas/clothes/lunch/etc) and we will actually have more "spending money" than we do now. Other than a few trips we've been planning, our spending will probably be even lower as well. Again... not positive yet but I'm thinking more and more that it's time...

[DrRoy]

I think you would be OK for a while, but I would not be comfortable with an assumption that my spending would decline over time. I know that there is some logic to that in that as we age we are not able to do as much, but I do not think that takes inflation into account particularly medical inflation. SS is supposed to be indexed, but the indexing may fall short. I think you would be safer with a bigger investment pool or some additional income.

Quote:

Does anyone think an expected annual market return of 7~8% a little bit rosy?

Yes I do. This is one of my key concerns. The expected rate of return is a key component in WR calculations. Evidence shows that the drivers of past returns (growth in the workforce and productivity) are weaker than they used to be, and I personally believe that they will continue to be soft, so future returns will be weaker also.

[Dawg52]

Good luck to you. You have the expertise to do some part time or contract work so that is a nice backup plan to have in your hip pocket. Let us know how things progress.

[mistermike40]

Quote:

Originally Posted by DrRoy I think you would be OK for a while, but I would not be comfortable with an assumption that my spending would decline over time. I know that there is some logic to that in that as we age we are not able to do as much, but I do not think that takes inflation into account particularly medical inflation. SS is supposed to be indexed, but the indexing may fall short. I think you would be safer with a bigger investment pool or some additional income.

I understand what you're saying. I do have the option of working if needed but I don't think it will come to that. All of my analysis is done with inflation at 3%, 3.3% and 4%. Megacorp provides a medical premium stipend not just now but post-65 (Medicare).

[mistermike40]

Quote:

Originally Posted by Dawg52 Good luck to you. You have the expertise to do some part time or contract work so that is a nice backup plan to have in your hip pocket. Let us know how things progress.

Thanks Dawg52! I've been thinking, I might take a year off and then work (part-time) for maybe six months, take a break, work three more months, etc... not just for a little extra income but maybe I'll miss work more than I realize (though I seriously doubt it!)