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New to this board--thinking of pulling the plug
Old 12-11-2016, 02:44 PM   #1
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New to this board--thinking of pulling the plug

I think my working days might be over, but wanted to throw this out there

I have more than 300x my monthly expenses and over 25x my yearly expenses in investments

FIRECALC retirement calculator has me at a 98% success rate and the Fidelity calculator has me with money left over assuming "below average" market returns

any thoughts?

thank you
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Old 12-11-2016, 02:49 PM   #2
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Welcome. Have you seen this?

http://www.early-retirement.org/foru...ire-69999.html
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Old 12-11-2016, 03:06 PM   #3
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Thank you Travel
Yes--I have seen this...I think I'm in good shape as far as those questions go..I mean if tax rates in 20 years are 50% that would stink I guess!

I guess I'm just more hanging my hat as they say on the fidelity and firecalc numbers that churned out....is that unwise?
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Old 12-11-2016, 03:12 PM   #4
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Originally Posted by FREE866 View Post
I think my working days might be over, but wanted to throw this out there

I have more than 300x my monthly expenses and over 25x my yearly expenses in investments

FIRECALC retirement calculator has me at a 98% success rate and the Fidelity calculator has me with money left over assuming "below average" market returns

any thoughts?

thank you
Assuming you are in US here.... Health insurance covered and included in those expenses (if you are like me, this is a huge variable, so maybe a big plug number)? Are your "monthly expenses" and "yearly expenses" those you have now, or those you'll have in retirement? (Not necessarily even close to the same.)

How fixed are your expenses and how old are you? Many people, both on this board and in related professional fields, are leery of 4% going forward from today's valuations. (and, remember, it is for 30 year retirement) Others legitimately state the 4% "rule" includes the depression, etc.... (rebuttal--what about Japan since 1989...). Can you cut expenses fairly painlessly if the pessimists are correct?

BTW, WELCOME to posting here!
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Old 12-11-2016, 03:18 PM   #5
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Assuming you are in US here.... Health insurance covered and included in those expenses (if you are like me, this is a huge variable, so maybe a big plug number)? Are your "monthly expenses" and "yearly expenses" those you have now, or those you'll have in retirement? (Not necessarily even close to the same.)

How fixed are your expenses and how old are you? Many people, both on this board and in related professional fields, are leery of 4% going forward from today's valuations. (and, remember, it is for 30 year retirement) Others legitimately state the 4% "rule" includes the depression, etc.... (rebuttal--what about Japan since 1989...). Can you cut expenses fairly painlessly if the pessimists are correct?

BTW, WELCOME to posting here!
thx 2017
Here are more details:
I'm 50
Starting January 1st I am on my girlfriend of 11 years healthplan. I'm in excellent health--I know that doesn't guarantee anything but I have no ongoing conditions.
I'm assuming I spend the same in retirement as I do now and that includes 2 vacations per year.
and yes..live in NYC..and I could shave a couple grand off expenses if need be
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Old 12-11-2016, 03:30 PM   #6
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In your 25x annual expenses, does that include income taxes? Taxes might go down, increasing the 25x. Other things, as mentioned above, could cause it to decrease, though. Age 50 with a working girlfriend, 25x, 98% Firecalc seems pretty good to me. Can you get back into work if you don't like being out of the action? The relief from not working only will last a short while, so you will probably need to figure out something else to give life a bit of meaning.
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Old 12-11-2016, 03:36 PM   #7
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In your 25x annual expenses, does that include income taxes? Taxes might go down, increasing the 25x. Other things, as mentioned above, could cause it to decrease, though. Age 50 with a working girlfriend, 25x, 98% Firecalc seems pretty good to me. Can you get back into work if you don't like being out of the action? The relief from not working only will last a short while, so you will probably need to figure out something else to give life a bit of meaning.
Hi seng
it's 25x my after tax expense
yes--I totally can get back into work if I choose to I guess. After selling for almost 30 years though I am so done! haha
I have other passions to keep me busy though
In terms of what I will do with my time. I plan to do more volunteer with animal protection groups in addition to projects for NY Cares, take a class at Hunter college, meditation groups, exercise, etc
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Old 12-11-2016, 04:26 PM   #8
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I think my working days might be over, but wanted to throw this out there

I have more than 300x my monthly expenses and over 25x my yearly expenses in investments

FIRECALC retirement calculator has me at a 98% success rate and the Fidelity calculator has me with money left over assuming "below average" market returns

any thoughts?

thank you
I prefer to have money left over with the "significantly below average" run of Fidelity RIP. Equates to 90% confidence level in their model. 25X expenses, 4% withdrawal rate, might be a little aggressive for a 40 to 45 year planning horizon.
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Old 12-11-2016, 06:29 PM   #9
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I prefer to have money left over with the "significantly below average" run of Fidelity RIP. Equates to 90% confidence level in their model. 25X expenses, 4% withdrawal rate, might be a little aggressive for a 40 to 45 year planning horizon.
couple things...
when I do the "significantly below average" run it says I might run out of money at age 91
yes, initially I will be doing ~4% withdrawal, but once SS kicks in, even if my portfolio is cut in half, the % withdrawal should go down a decent amount....there's also the option that IF we have really really bad markets for the next 12 years I could opt to take early SS....let me know if that make sense...thank you
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Old 12-11-2016, 06:53 PM   #10
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couple things...
when I do the "significantly below average" run it says I might run out of money at age 91
yes, initially I will be doing ~4% withdrawal, but once SS kicks in, even if my portfolio is cut in half, the % withdrawal should go down a decent amount....there's also the option that IF we have really really bad markets for the next 12 years I could opt to take early SS....let me know if that make sense...thank you
Depending how you funds are invested, you may need to cut back in the early years if the market tanks and stays down for several years. Many call this "sequence of returns risk". What happens---you pick a withdrawal rate from the starting balance at retirement, the market declines significantly----then you find yourself eating the same $$ WR from a much lower portfolio value. For me, this is one of my biggest fears, this phenomenon can devastate a portfolio in the early years if adjustments are not made. Now if you have the ability to cut back significantly until the markets recover, the damage can be minimized. Having some flexibility greatly helps to mitigate this risk. There are several strategies you can employ. Do a search on sequence risk and you will find some interesting reading on the topic.
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Old 12-11-2016, 07:04 PM   #11
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Depending how you funds are invested, you may need to cut back in the early years if the market tanks and stays down for several years. Many call this "sequence of returns risk". What happens---you pick a withdrawal rate from the starting balance at retirement, the market declines significantly----then you find yourself eating the same $$ WR from a much lower portfolio value. For me, this is one of my biggest fears, this phenomenon can devastate a portfolio in the early years if adjustments are not made. Now if you have the ability to cut back significantly until the markets recover, the damage can be minimized. Having some flexibility greatly helps to mitigate this risk. There are several strategies you can employ. Do a search on sequence risk and you will find some interesting reading on the topic.
Gotcha.
here are my thoughts...when markets go down abruptly they don't usually stay down for years. That said, assuming January 1st as the start I will receive $1500 per month for the first 6 months through unemployment insurance so for calendar 2017 my withdraw from the total portfolio will actually be a bit under 3%. I also have 60K in cash so IF it is a bloody year I can use that as opposed to selling depressed stocks. And thank you all for your comments and questions...it's very helpful....
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Old 12-13-2016, 06:49 AM   #12
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Looks to me like you are in pretty good shape. Of course nothing is guaranteed - the future may hold unforeseen expenses or investment losses - but that is always true, regardless of how much capital has been accumulated.

I guess the real question is how much of a 'buffer' do you need to enable you to sleep comfortably? The fact that you (apparently) could if necessary return to work is a big plus
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Old 12-13-2016, 07:37 AM   #13
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Looks to me like you are in pretty good shape. Of course nothing is guaranteed - the future may hold unforeseen expenses or investment losses - but that is always true, regardless of how much capital has been accumulated.

I guess the real question is how much of a 'buffer' do you need to enable you to sleep comfortably? The fact that you (apparently) could if necessary return to work is a big plus
Thx Milton

As I might have mentioned I've been selling for almost 30 years and been at the same company for almost 12. I'm just done. I know myself. I'm def done with corporate America. That doesn't mean after 6 months I won't consider doing something that brings in more income, but man the idea of just "not working" for a bit and doing things I truly enjoy is something I really look forward to!
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Old 12-13-2016, 08:25 AM   #14
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Mostly the answer depends on how good the input to Firecalc is. If you've underestimated expenses like health care, or missed irregular expenses like home repair and car replacement, you can't count on the Firecalc output to be accurate.
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Old 12-13-2016, 08:29 AM   #15
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Mostly the answer depends on how good the input to Firecalc is. If you've underestimated expenses like health care, or missed irregular expenses like home repair and car replacement, you can't count on the Firecalc output to be accurate.
Hi Running
I'm in excellent health, not that stuff cant come up, but I have no ongoing issues. I don't own a home or a car.
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Old 12-13-2016, 08:31 AM   #16
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Free 866 - I've used both the Fidelity and FireCalc. The relative merits of calculators have their own threads somewhere (I'm sure), but I just want to make a plug for the Flexible Retirement Planner. The Flexible Retirement Planner | A financial planning tool powered by Monte Carlo Simulation

It has more inputs and allows for more sophisticated sensitivity testing. It also has a combination of Monte Carlo-based simulation and historical simulation. It also includes income taxes in the model, whereas Firecalc requires you to do that outside of the model.

In any event, it sounds like you are very close. Personally, I'm still a few years away so congratulations!
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Old 12-13-2016, 01:27 PM   #17
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Hi Running
I'm in excellent health, not that stuff cant come up, but I have no ongoing issues. I don't own a home or a car.
When I saw NYC I figured you might not have those assets to replace or repair. Still, just a general point that any such tool is only as accurate as the data you give it.

I'm great shape too, but I have still racked up some medical bills being TOO healthy and active, and injured myself. That taught me to look at deductibles and max out of pocket as well as premium costs.
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Old 12-13-2016, 01:39 PM   #18
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Free 866 - I've used both the Fidelity and FireCalc. The relative merits of calculators have their own threads somewhere (I'm sure), but I just want to make a plug for the Flexible Retirement Planner. The Flexible Retirement Planner | A financial planning tool powered by Monte Carlo Simulation

It has more inputs and allows for more sophisticated sensitivity testing. It also has a combination of Monte Carlo-based simulation and historical simulation. It also includes income taxes in the model, whereas Firecalc requires you to do that outside of the model.

In any event, it sounds like you are very close. Personally, I'm still a few years away so congratulations!
+1
I personally would not rely solely oh FC. I would throw my information into Fidelity's tool and look at their "significantly below market conditions" output. In retirement, hope for the best, but expect and plan for the worst (unless you like playing with risk, which is not at all prudent).
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Old 12-13-2016, 01:43 PM   #19
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+1
I personally would not rely solely oh FC. I would throw my information into Fidelity's tool and look at their "significantly below market conditions" output. In retirement, hope for the best, but expect and plan for the worst (unless you like playing with risk, which is not at all prudent).
When I do "significantly below market conditions" it indicates a might run out at age 91 lol
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Old 12-13-2016, 01:55 PM   #20
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and you might live to be 95. Have you modeled the possibility of SS reduction, medicare reform, tax reform? Have you made provisions for a bad sequence of returns early in retirement? Have you modeled unexpected expenses through end of PF life? How secure will you feel if you retire tomorrow and the day after your PF drops by 20-30% (depending on your AA)? Again, hope for the best but expect/plan for the worst.

Best advice I read is to create two scenarios: one where your plans worked out the way you wanted and the other where they didn't. Our natural human tendency when making goals is to focus on the joy of achieving them and all the good things we think will happen. A much more intelligent course is to think of all that could go wrong and make provisions to avoid that scenario those scenarios. As they say, in retirement, "you only get one whack at the cat." Make sure your swing is a good one.
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