It's Time....Critique my plan, please

[pb4uski]

Quote:

Originally Posted by pjigar I am in a boat who believes SWR of more than 3% is not prudent considering the low return future we face for a next decade or more. Cut you expenses or build up nest egg some more.

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Originally Posted by pb4uski What you and other posters saying "no" are missing is that while the OP's initial WR is 4%, their ultimate WR, after pensions and SS start is much lower and it is that ultimate WR that counts. With respect to your 3% WR statement, while you are entitled to your opinion, IMO 3% is too conservative. As others have pointed out, the prospects of low returns are also accompanied by the prospect of low inflation.

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Originally Posted by pjigar "Low return" comment was for the returns after inflation. .....

You still are not "getting it". The OP has $2.4 million and a $96k a year spending target. OP will get $31k pension at age 65 and he is 53 and DW is 51. They ll also get SS but he doesn't say how much.

You and others are saying don't retire now because their WR is 4% ($96k spending vs $2.4 million nestegg) but you are focusing on the wrong WR. We need to look at the WR once pensions and SS start.

Let's assume that their SS is $20k each and starts at 67.

Let's say they carve out money out of the $2.4 million to cover spending before pensions and SS start. He has 12 years before the $31k pension starts... so that is $372k. He has 14 years before SS starts, so that is $280k. She has 16 years before SS starts, so that would be $320k. So all together, they need ~$1 million to cover gaps before SS starts so that reduces their $2.4 million to $1.4 million.

Once their pension and SS is online their gap is only $25k ($96k spending target -$31k pension -$40k SS), so their ultimate WR would only be 1.8% ($25/$1.4 million) which is very conservative. Wouldn't you agree that it would be prudent for a 52 year-old to retire with a 1.8% WR?

The green lights that they are getting from FireCalc and other tools reiterate the above so I see no reason why they should not retire now.

[rodi]

I think you're fine... I retired with a smaller nest egg and a plan of 90k/year spend. I still have/had kids under the roof. Turns out my actual spending was far less (by about 10k). Like you I had a non-cola pension a few years out - and have since started it. We also have rental income and DH has SS. Our WR is only 3% because of these other sources of income. But as I said - we had a smaller nest egg.

You have to weigh whether padding the nest egg is worth the stress/unhappiness at work. Are you going to worry/lose sleep if you don't pad the nest egg more...

I, personally, think you're fine... but it's not my life and not my decision to make.

[Cobra9777]

I agree with pb4uski. This is why WRs are of little use in answering the question, "Am I good to go?" Many early retirees have various "phases" with different income streams coming online at various times. It's not at all unusual nor undesirable for the initial WR to be high, even above 4%. Likewise, expenses often do not follow a clean, flattish, or upward sloping line, and may have little resemblance to pre-retirement spending. Model your expenses carefully, then just plug your numbers into FIRECalc, ********, Fidelity RIP, and i-ORP, and see what they say. I like to maintain my own spreadsheet as well. I retired when all these tools agreed that I was good to go, not based on any WR.

[pjigar]

Quote:

Originally Posted by pb4uski You still are not "getting it". The OP has $2.4 million and a $96k a year spending target. OP will get $31k pension at age 65 and he is 53 and DW is 51. They ll also get SS but he doesn't say how much. You and others are saying don't retire now because their WR is 4% ($96k spending vs $2.4 million nestegg) but you are focusing on the wrong WR. We need to look at the WR once pensions and SS start. Let's assume that their SS is $20k each and starts at 67. Let's say they carve out money out of the $2.4 million to cover spending before pensions and SS start. He has 12 years before the $31k pension starts... so that is $372k. He has 14 years before SS starts, so that is $280k. She has 16 years before SS starts, so that would be $320k. So all together, they need ~$1 million to cover gaps before SS starts so that reduces their $2.4 million to $1.4 million. Once their pension and SS is online their gap is only $25k ($96k spending target -$31k pension -$40k SS), so their ultimate WR would only be 1.8% ($25/$1.4 million) which is very conservative. Wouldn't you agree that it would be prudent for a 52 year-old to retire with a 1.8% WR? The green lights that they are getting from FireCalc and other tools reiterate the above so I see no reason why they should not retire now.

I get it now. I missed the pension part. I never had a remote chance of getting any pension so my brain simply ignores pension as noise!