Next Step - FIRE?

[trop66]

Hello All,

After a solid 29 year run in corporate America with two companies, my position was recently eliminated and I'm facing a new chapter that is largely unscripted.

An option that I've been contemplating and preparing for for many years is the early retirement option and I've been encouraged about that possibility after reading various threads on this forum and the many insights that forum members have offered.

I'll be 52 in a couple of months but consider 2018 to "be in the books" in terms of income with company severance and unemployment so would not look to "officially" retire until 2019.

My current situation is as follows:

Portfolio Value: $2.4 MM - Savings, IRAs, 401k's, small pension, and some company stock

Liabilities: $0 - no mortgage, debt, etc. , kids grown and on their own

Anticipated Annual Expenses: $50,000

I'm currently married (and plan to stay married) and live in a low COLA in the Mid-Atlantic.

I'm anticipating that healthcare will be my largest expense moving forward so I've begun researching those options including COBRA and beyond.

Any thoughts, comments, opinions, with regard to the viability of early retirement based on above are greatly appreciated.

Would particularly value any feedback from others that found themselves in a similar predicament, with similar age/asset/expense profile and hindsight experiences with early retirement.

Thanks in advance for your time and input!

Sincerely,
trop66

 

[kgtest]

Good luck, first glance looks similar to how I wish to retire around age 50. Healthcare / health is always the x factor. Good health lasts until it doesn't then the x factor is a factor, if that makes sense. My first FA I ever spoke with said #1 reason people run out of money besides a preceding divorce was bad health, and unexpected costs associated.

Must be due to our aging process, not being an issue first half-life probably is hard to pin total cost.

If you have good health, and the bull continues, I see no reason you aren't "good to go".

 

[exnavynuke]

A $2.4M portfolio should easily cover your stated $50k spending (as a 4% withdrawal rate would give you ~$96k/year). As such, I don't see any reason you should be thinking about working anymore (unless you want to).

 

[joeea]

With a portfolio of $2.4MM and expenses of just $50k, you can live until 100 even with 0% return.

You haven't mentioned Social Security, or if your pension is inflation-protected. Those would make an already winning hand even stronger.

Are you sure you actually want to retire at 52? Have you thought about what you will do with your time in retirement?

Double-check your assumptions. If they hold up, then enjoy your retirement!

Remember, being financially independent means you can do what you want and don't need to worry about finances. You might want to do nothing. Or you might want to work at something that brings you enjoyment without regard to income. Or something else.

 

[whatnot]

Does your $50k in expenses include healthcare premiums/out of pocket costs, dental, eye, etc. and Federal taxes? Have you run Fire Calc? On the surface, you do look good to go.

 

[GrayHare]

Welcome. What others said. Good to go IMO. BTW that's a nicely written intro, I'd guess your career involved a fair amount of writing.

 

[Stormy Kromer]

I'm also 52 and worked 31 + years with the same employer. I FIRE'd at age 50 with investments of $3.2 million, no pension or sponsored health insurance. Also, no debt and a modest standard of living, tracked annual expenses of $45,000 plus $15,000 health insurance. Kids are grown. We sound pretty similar.


My exit was planned, I was going to take as much time to myself as I needed and then look for another J*b and retire completely at age 60. I did some part time work and found that I'd rather do volunteer work, if it's not about the money you should do if for the satisfaction.


I've been fortunate to have had the investment returns of the last two years and net worth has grown significantly even without earned income for two years.


I moved and made new friends, I needed to get away from my past work environment and clients. It's actually helped me reinvent myself and I've met many new friends and we seldom, if ever, talk about our past work.


It can be done.

 

[ivinsfan]

For healthcare the number one question, what is your actual income? if you have some after tax money to live on, you would be in position to get an ACA subsidy.

 

[trop66]

All,

Thanks for taking the time to provide comments, offer questions I should be asking, and sharing your circumstances and experiences-much appreciated!

I find your comments to be immensely helpful as I work though this process and contemplate a future that is free from the long hours, stress, instability, etc. of the corporate grind.

Sincerely,
trop66

 

[burned out shift worker]

For healthcare the number one question, what is your actual income? if you have some after tax money to live on, you would be in position to get an ACA subsidy.

ACA has no asset test. Income determines subsidy amount.

 

[pb4uski]

Check this out: http://www.early-retirement.org/for...-answer-before-asking-can-i-retire-69999.html

Also, does the $50k include periodic replacements of cars, roofs, HVAC, etc. Travel? Weddings?

That said... it looks like you are golden.

Also check out healthsherpa.com for ACA insurance plans in your zip code.

 

[ivinsfan]

ACA has no asset test. Income determines subsidy amount.

You do need assets to live on if you don't have money...I don't understand your point.

 

[Independent]

Check this out: http://www.early-retirement.org/for...-answer-before-asking-can-i-retire-69999.html

Also, does the $50k include periodic replacements of cars, roofs, HVAC, etc. Travel? Weddings?

That said... it looks like you are golden.

Also check out healthsherpa.com for ACA insurance plans in your zip code.

+1

That link is great. I have two additions

13. What is your plan for long term care expenses? No, "I'll just shoot myself" isn't a plan. (When you really need help, they'll take your gun away.)

14. Have you thought about boomerang kids? or other relatives who may be barely self-supporting today?

 

[cyber888]

2.4 mil with $50k expenses.. you can retire now .. no sweat

 

[DrRoy]

With a portfolio of $2.4MM and expenses of just $50k, you can live until 100 even with 0% return.

You haven't mentioned Social Security, or if your pension is inflation-protected. Those would make an already winning hand even stronger.

Are you sure you actually want to retire at 52? Have you thought about what you will do with your time in retirement?

Double-check your assumptions. If they hold up, then enjoy your retirement!

Remember, being financially independent means you can do what you want and don't need to worry about finances. You might want to do nothing. Or you might want to work at something that brings you enjoyment without regard to income. Or something else.

+1. Well said.

 

[trop66]

Thanks for the quick analysis and vote of confidence exnavynuke - much appreciated!

 

[burned out shift worker]

If you W/D funds from a retirement accounts 401K, IRA the total W/D is taxable income. along with what your non-retirement (taxable accounts) accounts earned.

If you only W/D funds from your non-retirement accounts (taxable accounts) you have no taxable income from your retirement accounts. and possibly qualify for a ACA subsidy.

Think of it this way a person can have $70,000 spendable cash a year but only have $35,000 of taxable income.

order of spend down Taxable accounts 1st.... IRA/401K's 2nd......roths last..