Looking to See if This is the Year

[pinot]

I am feeling like it’s time to see if I can shut ‘er down. Here is my situation:

Me: 59 years old; Wife: 56

Wife plans to work for a while. Let’s say retire 1/1/23. She makes around 160,000 & has excellent healthcare. I am thinking it makes sense for her to continue 401-k contributions but only enough to max out the company match.

Retirement savings: 1.85 million. Taxable savings: 350,000

Home equity: 500,000 (owe 155,000 on mortgage):

Child 1: 24 yo college grad who is currently working full-time & living at home. She is considering grad school. If she gets accepted, her tuition would be covered by the school along with healthcare & some amount of a stipend. We have a custodial account in her name with around 20,000. Our financial assistance for her will probably exist for a little while but should be minimal. No student loans to pay back.

Child 2: 19 yo college sophomore. He has a large scholarship & we have more than enough in a 529 to cover him until he graduates. He is studying engineering & should have little trouble getting a job upon graduation.

Pension (wife): 14,500 starting 1/1/23 (non-COLA)

Social Security (age 70 for both of us - 40,000 annually each)

Ideally, I would like to retire at the end of this year & then withdraw $5000/month from savings at that point. Total income after she retires…I dunno…175,000.

I have tried plugging info into FireCalc but not sure if I am doing it correctly as my situation is a little tricky, it seems.

I am thinking that it makes sense to meet with an hourly fee retirement planner but I would really appreciate feedback from the crew here.

[joeea]

Quote:

Originally Posted by pinot Total income after she retires…I dunno…175,000.

What does "total income" mean in this context?

Why don't you know what the number is?

Quote:

I am thinking that it makes sense to meet with an hourly fee retirement planner

I agree, as long as you ensure that the planner is a fiduciary.

[Dtail]

Quote:

Originally Posted by pinot I am feeling like it’s time to see if I can shut ‘er down. Here is my situation: Me: 59 years old; Wife: 56 Wife plans to work for a while. Let’s say retire 1/1/23. She makes around 160,000 & has excellent healthcare. I am thinking it makes sense for her to continue 401-k contributions but only enough to max out the company match. Retirement savings: 1.85 million. Taxable savings: 350,000 Home equity: 500,000 (owe 155,000 on mortgage): Child 1: 24 yo college grad who is currently working full-time & living at home. She is considering grad school. If she gets accepted, her tuition would be covered by the school along with healthcare & some amount of a stipend. We have a custodial account in her name with around 20,000. Our financial assistance for her will probably exist for a little while but should be minimal. No student loans to pay back. Child 2: 19 yo college sophomore. He has a large scholarship & we have more than enough in a 529 to cover him until he graduates. He is studying engineering & should have little trouble getting a job upon graduation. Pension (wife): 14,500 starting 1/1/23 (non-COLA) Social Security (age 70 for both of us - 40,000 annually each) Ideally, I would like to retire at the end of this year & then withdraw $5000/month from savings at that point. Total income after she retires…I dunno…175,000. I have tried plugging info into FireCalc but not sure if I am doing it correctly as my situation is a little tricky, it seems. I am thinking that it makes sense to meet with an hourly fee retirement planner but I would really appreciate feedback from the crew here.

Can you tell us what you plugged into each Firecalc screen and we can take it from there?

[pinot]

Quote:

Originally Posted by joeea What does "total income" mean in this context? Why don't you know what the number is? I agree, as long as you ensure that the planner is a fiduciary.

175,000 would be our annual income need after my wife retires

[ivinsfan]

Quote:

Originally Posted by pinot I am feeling like it’s time to see if I can shut ‘er down. Here is my situation: Me: 59 years old; Wife: 56 Wife plans to work for a while. Let’s say retire 1/1/23. She makes around 160,000 & has excellent healthcare. I am thinking it makes sense for her to continue 401-k contributions but only enough to max out the company match. Retirement savings: 1.85 million. Taxable savings: 350,000 Home equity: 500,000 (owe 155,000 on mortgage): Child 1: 24 yo college grad who is currently working full-time & living at home. She is considering grad school. If she gets accepted, her tuition would be covered by the school along with healthcare & some amount of a stipend. We have a custodial account in her name with around 20,000. Our financial assistance for her will probably exist for a little while but should be minimal. No student loans to pay back. Child 2: 19 yo college sophomore. He has a large scholarship & we have more than enough in a 529 to cover him until he graduates. He is studying engineering & should have little trouble getting a job upon graduation. Pension (wife): 14,500 starting 1/1/23 (non-COLA) Social Security (age 70 for both of us - 40,000 annually each) Ideally, I would like to retire at the end of this year & then withdraw $5000/month from savings at that point. Total income after she retires…I dunno…175,000. I have tried plugging info into FireCalc but not sure if I am doing it correctly as my situation is a little tricky, it seems. I am thinking that it makes sense to meet with an hourly fee retirement planner but I would really appreciate feedback from the crew here.

what do you mean your situation is a little tricky?

[pinot]

Quote:

Originally Posted by Dtail Can you tell us what you plugged into each Firecalc screen and we can take it from there?

Let me track this down later today - thanks

[pinot]

Quote:

Originally Posted by ivinsfan what do you mean your situation is a little tricky?

Tricky from a FireCalc standpoint with the staggered retirement dates for my wife & I

[joeea]

Quote:

Originally Posted by pinot 175,000 would be our annual income need after my wife retires

Ah. So you are anticipating $175,000/year in expenses. Got it.

Based on your "I dunno" comment, it sounds like you just pulled that number out of the air. You might want to get a better handle on it before you start burning hours with an adviser.

[pinot]

Quote:

Originally Posted by Dtail Can you tell us what you plugged into each Firecalc screen and we can take it from there?

FireCalc Info:

- Page 1: Spend 175,000…Portfolio: 2.2 million…Years: 30

- Page 2: My SS 40,000 starting 2030…Wife SS 40,000 starting 2033…Pension 14,500 starting 2024 (wife’s pension)…Off-chart spend (60,000 starting in 2020 to reflect my withdrawals)…Pension income (60,000 starting in 2023 to cancel out my withdrawals)

- Page 3: Not retired until 2023. 10,000 per year added until then

Constant Spending Power model indicates 84% success rate

[pb4uski]

No need to off chart spend that 60k so get rid of that and the pension since the $60k in includee in the $175k of spending. I think I would do the opposite... add in your DW's income that will be used towards expenses as a pension starting immediately then offset by an off-chart spending entry in 2023.

Does your $175k spending include your mortgage payments? Spending should be excluding mortgage payments.

Mortgage payments can be provided in one of two ways... best practice is to include mortgage payments as fixed off-chart spending offset by a fixed pension in the year the mortgage is paid.... or you can just reduce your nestegg by the mortgage balance. But since you are using the off chart spending/pension fields to provide for your wife's contribution to expenses from now until 2022 the easiest thing will be to reduce your nestegg by your mortgage (as if you paid it off... you would not have the payments or the money).

[imoldernu]

No recommendations as far as advice is concerned, but two or three hours of making up well thought out spread sheets can give more confidence and save many dollars in financial Advisor fees. Even if you later use a financial advisor, your pre-work will save hours of analysis and give much more confidence.

Seems to me that this is the mistake that too many early retirees make. Trust in Firecalc, but know the dollars... down on paper.

[pinot]

Quote:

Originally Posted by pb4uski No need to off chart spend that 60k so get rid of that and the pension since the $60k in includee in the $175k of spending. I think I would do the opposite... add in your DW's income that will be used towards expenses as a pension starting immediately then offset by an off-chart spending entry in 2023. Does your $175k spending include your mortgage payments? Spending should be excluding mortgage payments. Mortgage payments can be provided in one of two ways... best practice is to include mortgage payments as fixed off-chart spending offset by a fixed pension in the year the mortgage is paid.... or you can just reduce your nestegg by the mortgage balance. But since you are using the off chart spending/pension fields to provide for your wife's contribution to expenses from now until 2022 the easiest thing will be to reduce your nestegg by your mortgage (as if you paid it off... you would not have the payments or the money).

pb - thanks very much for the input. I will give FireCalc another pass when I find some time this weekend.

[pinot]

I made the FireCalc changes suggested by @pb4uski & it indicates a 90.8% success rate. Any additional thoughts would be appreciated.

[The Cosmic Avenger]

Pinot, if you have Fidelity, deep in their retirement planner is a detailed monthly expense worksheet, and it allows for things like spending only for certain years that I've used to account for ACA insurance until age 65, for example. It has a lot of categories like travel, utilities, many of which you can base on your current spending (and increase or decrease as you may see fit). If you don't have Fido you'll have to find a worksheet, but I'm sure there are many out there. I like Fido because they already have a lot of my info, so it's convenient as well as comprehensive.