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06-22-2016, 08:45 PM
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#1
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Thinks s/he gets paid by the post
Join Date: Apr 2016
Location: Dutchess County
Posts: 1,599
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Loving Retirement
Hi all, been lurking for a few months so figure its time to introduce myself.
I’m Steve and retired from NY state government service 12/02/15. Age 55.
Been reading ton’s of threads on ER, lots of good info, but kind of glad I didn’t find this site prior to pulling the plug or I might have been scared off from doing so.
A little background: Didn’t start being serious about life and work until I was 30 years old and didn’t start contributing to deferred comp plan until I was 40.
So this is where I am, I was earning very low six figures gross and netting about 60% after all deductions. I now get payments from a defined benefit plan no cola until I’m 62 and a small draw on my 457 plan. All monthly bills paid for i.e.: Mortgage, taxes, electric, etc, ect. and I am able to start building an emergency fund, also still have some fun money. Mortgage is the only outstanding debt, no CC’s and such.
Income replacement is at 89.5% net. So only took a haircut of 11% between working and not working. By not commuting and lunch money I save more than 11%. No out of pocket for medical except $20 co pay until Medicare eligible then must sign up for part A and B, part B cost will be reimbursed by state and state will pick up what Medicare does not pay like a supplement plan I guess. If I kick the bucket the DW will keep the same medical and she gets 75% of my DB plan for life.
457 will last until I’m 60 then I have a small 401K to last until I’m 62, I plan to take SS at 62 because I had cancer at 52 and who knows if it will ever come back.
I guess the big question is using the income replacement method valid?
So far 6 months in it seems to work.
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06-23-2016, 05:39 AM
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#2
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Thinks s/he gets paid by the post
Join Date: Feb 2014
Location: Williston, FL
Posts: 3,925
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Quote:
Originally Posted by Just_Steve
I guess the big question is using the income replacement method valid?
So far 6 months in it seems to work.
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I will find out very soon. From my calculations, deducting Medicare/SS, 401K, my house payment that is no more and extra federal income taxes, I only need ~30% of what I was making to have the equivalent after tax money.
An 85% replacement ratio assume you do not save very much to begin with.
Description | Amount | Salary | $113,001 | -FICA | ($8,645) | -Health Care Sav | ($4,350) | Less 401K | ($24,000) | Tax Savings | ($26,300) | Sub Total | $49,706 | Mortgage Pmt | ($16,836) | Annual Total | $32,870 | Monthly Total | $2,739 | Salary Equiv % | 29.09% |
__________________
FIRE no later than 7/5/2016 at 56 (done), securing '16 401K match (done), getting '15 401K match (done), LTI Bonus (done), Perf bonus (done), maxing out 401K (done), picking up 1,000 hours to get another year of pension (done), July 1st benefits (vacation day, healthcare) (done), July 4th holiday. 0 days left. (done) OFFICIALLY RETIRED 7/5/2016!!
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06-23-2016, 08:29 AM
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#3
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Thinks s/he gets paid by the post
Join Date: Dec 2015
Location: Michigan
Posts: 4,962
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That sounds good for now, but your salary was likely keeping up with inflation or better and your RE income will not do as well there.
__________________
"The mountains are calling, and I must go." John Muir
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06-23-2016, 08:41 AM
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#4
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Thinks s/he gets paid by the post
Join Date: Jan 2013
Posts: 3,405
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"An 85% replacement ratio assume you do not save very much to begin with."
I don't agree. It means you intend to spend as much in retirement as you did working, less the costs of working, including your "typical" retirement contribution. If you are smart about this, you have paid off most or all of your debt and your retirement contributions that were a large percentage of you salary go away. After you adjust for the difference between your employer paid health insurance and ACA or whatever you substitute, which in Senator's case is free through the VA, and reduced taxes if that applies, then you see what you need to replace in terms of percentage of your income while working.
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06-23-2016, 09:00 AM
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#5
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Thinks s/he gets paid by the post
Join Date: Apr 2016
Location: Dutchess County
Posts: 1,599
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Quote:
Originally Posted by DrRoy
That sounds good for now, but your salary was likely keeping up with inflation or better and your RE income will not do as well there.
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Wish that was the case, managerial salary freeze 6 of my last 7 years of employment although I did get promotion bump 5 yrs ago but voluntary demoted 2 yrs ago, didn't want to deal with the stress after returning from extended sick leave.
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06-23-2016, 09:23 AM
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#6
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Full time employment: Posting here.
Join Date: Jul 2014
Posts: 930
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Sounds like a plan. You say your pension gets COLA adjustments after age 62 right? You've got a defined benefit pension and retiree medical - both big pluses. And a serious medical issue really makes you think about what is important to you in life. Continued good health and welcome!
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06-23-2016, 05:13 PM
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#7
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Thinks s/he gets paid by the post
Join Date: Apr 2016
Location: Dutchess County
Posts: 1,599
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Quote:
Originally Posted by Senator
I will find out very soon. From my calculations, deducting Medicare/SS, 401K, my house payment that is no more and extra federal income taxes, I only need ~30% of what I was making to have the equivalent after tax money.
An 85% replacement ratio assume you do not save very much to begin with.
Description | Amount | Salary | $113,001 | -FICA | ($8,645) | -Health Care Sav | ($4,350) | Less 401K | ($24,000) | Tax Savings | ($26,300) | Sub Total | $49,706 | Mortgage Pmt | ($16,836) | Annual Total | $32,870 | Monthly Total | $2,739 | Salary Equiv % | 29.09% |
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Besides my ongoing mortgage thats real close.
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