CantThinkofAUserName
Dryer sheet wannabe
- Joined
- Sep 23, 2011
- Messages
- 17
Hello, I discovered these forums recently and I'm making my way through the many posts - I've already found some great tips, books to read, and things to think about that I hadn't thought of yet.
I'm 43 and have been working in my profession career for 19 years. After finishing college and getting over the initial "hey, I'm getting paid real money now, I can eat out every meal, buy toys, etc.!" phase (lasted about a year), I took a basic course on personal money mangagement, then I read "Your Money or Your Life", followed by some other money management books/magazines. I spent several years learning about this, paid off my student loans as quickly as I could, bought a very low end house, and started saving towards retirement.
As I made progress on learning and saving, I thought I might be able to retire around age 40. However, as 40 approached, I evaluated my situation and decided I could retire at 40, but would not be able to upgrade my housing once I did that, and that I would rather upsize the house and move into a different type of neighborhood first, and postpone retiring for a while longer. I was more unhappy with our house and neighborhood than I was having to go to work every day So 4 years ago my long-term boyfriend and I bought a house and I sold the old one. BTW, the boyfriend-not-husband thing isn't a concern, I believe everything in that regard is taken care of. I started to explain further, but this intro could get really long if I go off on too many tangents. I don't mind going into it, just didn't want this post to end up being a book!
So, I've had my own way of figuring out how much I need to retire, but based on my calculations, it works out to needing $1,100,000 total between retirement savings and non-retirement savings, to take the plunge. In my case, this will end up being about 30% in retirement accounts and 70% in non-retirement accounts. I've estimated my annual expenses at around $55,000, which includes an estimate of $500-$600/month for medical premiums and out-of-pocket expenses. My calculations also take into account when the 2nd mortgage will end, when the first mortgage will end, and at what age I'll run out without SS (run out around age 96) or with SS (run out around age 107 LOL.) My estimate is based on a 3.5% rate of inflation and a 6.5% rate of return overall.
Since reading these forums, I looked at the other ways of calculating the "how much do I need", and my "withdraw rate" works out to 5%, although I wouldn't actually have even withdraws, due to the mortgages which will end eventually. However, using FIRECalc, I will not succeed. It believes I need to have quite a lot more saved (varies depending on what I fill into all the variables, but around 1,500,000).
I'm close to my 1,100,000 saved - if the stock market goes back up a bit, I would reach that goal mid-next year I think. I do think having a hard-set goal is a little hard since my total saved varies every time the stock market goes up or down.
Until using FIRECalc, my main hesitation was due to the unpredictability of health care expenses in the future. Now in addition to that concern, I wonder if FIRECalc knows something I don't know, too. The one thing I can think of is I'm not sure how much to include for income tax in my annual expense estimate - in the first 20 years, I would be mostly spending money I've already been taxed on, and I'd still have a large mortgage interest deduction; so I didn't include taxes in my expense estimate. Is there a rule of thumb about this? Maybe this is where FIRECalc differs from my estimates?
Since I'm hesitant to retire until I'm more certain it will work out, one thing I've considered is working part of the year each year. I don't typically see jobs in my field for part-time workers, but I do see 3-6 month contracts in my field fairly often. So, assuming I could get one of those each year, I could work 3-6 months each year, which would dramatically reduce my withdraw rate and also satisfy my desire to work less - I like the work I do, just would like more time to spend on my non-work interests.
I'd like to say more, but also want to get this posted, so I'll stop for now since this has already gotten very long!
I welcome comments/advice/greetings/etc.
I'm 43 and have been working in my profession career for 19 years. After finishing college and getting over the initial "hey, I'm getting paid real money now, I can eat out every meal, buy toys, etc.!" phase (lasted about a year), I took a basic course on personal money mangagement, then I read "Your Money or Your Life", followed by some other money management books/magazines. I spent several years learning about this, paid off my student loans as quickly as I could, bought a very low end house, and started saving towards retirement.
As I made progress on learning and saving, I thought I might be able to retire around age 40. However, as 40 approached, I evaluated my situation and decided I could retire at 40, but would not be able to upgrade my housing once I did that, and that I would rather upsize the house and move into a different type of neighborhood first, and postpone retiring for a while longer. I was more unhappy with our house and neighborhood than I was having to go to work every day So 4 years ago my long-term boyfriend and I bought a house and I sold the old one. BTW, the boyfriend-not-husband thing isn't a concern, I believe everything in that regard is taken care of. I started to explain further, but this intro could get really long if I go off on too many tangents. I don't mind going into it, just didn't want this post to end up being a book!
So, I've had my own way of figuring out how much I need to retire, but based on my calculations, it works out to needing $1,100,000 total between retirement savings and non-retirement savings, to take the plunge. In my case, this will end up being about 30% in retirement accounts and 70% in non-retirement accounts. I've estimated my annual expenses at around $55,000, which includes an estimate of $500-$600/month for medical premiums and out-of-pocket expenses. My calculations also take into account when the 2nd mortgage will end, when the first mortgage will end, and at what age I'll run out without SS (run out around age 96) or with SS (run out around age 107 LOL.) My estimate is based on a 3.5% rate of inflation and a 6.5% rate of return overall.
Since reading these forums, I looked at the other ways of calculating the "how much do I need", and my "withdraw rate" works out to 5%, although I wouldn't actually have even withdraws, due to the mortgages which will end eventually. However, using FIRECalc, I will not succeed. It believes I need to have quite a lot more saved (varies depending on what I fill into all the variables, but around 1,500,000).
I'm close to my 1,100,000 saved - if the stock market goes back up a bit, I would reach that goal mid-next year I think. I do think having a hard-set goal is a little hard since my total saved varies every time the stock market goes up or down.
Until using FIRECalc, my main hesitation was due to the unpredictability of health care expenses in the future. Now in addition to that concern, I wonder if FIRECalc knows something I don't know, too. The one thing I can think of is I'm not sure how much to include for income tax in my annual expense estimate - in the first 20 years, I would be mostly spending money I've already been taxed on, and I'd still have a large mortgage interest deduction; so I didn't include taxes in my expense estimate. Is there a rule of thumb about this? Maybe this is where FIRECalc differs from my estimates?
Since I'm hesitant to retire until I'm more certain it will work out, one thing I've considered is working part of the year each year. I don't typically see jobs in my field for part-time workers, but I do see 3-6 month contracts in my field fairly often. So, assuming I could get one of those each year, I could work 3-6 months each year, which would dramatically reduce my withdraw rate and also satisfy my desire to work less - I like the work I do, just would like more time to spend on my non-work interests.
I'd like to say more, but also want to get this posted, so I'll stop for now since this has already gotten very long!
I welcome comments/advice/greetings/etc.