Okay, this is where I'm at, am I ready?
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brewer12345
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
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Welcome, TT. I look forward to reading your posts.
I see a bunch of people in here asking for opinions so it's my turn. Since we are all using usernames, I guess it doesn't hurt to divulge a little personal data.
I'm 54 and planning on early retirement at 55 which will be in Sept. By waiting till 55 I will hold on to my medical insurance provided by my employer. My wife retired 3 years ago after twenty five years in the classroom and she gets a reduced retirement benifit of around $1300/month. At 55 I will have a small monthly benifit that I cannot cash out of around $300/month plus my 401k balance of around $900,000.
So bottom line I will have around $1600 guaranteed monthly plus the income I can derive from $900k that will probably be invested with Edward Jones.
For the last 10 years I have waited to be in this position and in truth I have more than I thought I would have. But is it enough. I would really like to keep the lifestyle we live now and I think I would need to have an income of at least $60k to $70k annually to fund it.
I'm sure many of you are in the same boat. I live in rural America where the cost of living is not high.
I have always said that when I'm 55 I would be out of the door but as it approches I guess I'm kinda getting nervous.
What do you think
I'm 54 and planning on early retirement at 55 which will be in Sept. By waiting till 55 I will hold on to my medical insurance provided by my employer. My wife retired 3 years ago after twenty five years in the classroom and she gets a reduced retirement benifit of around $1300/month. At 55 I will have a small monthly benifit that I cannot cash out of around $300/month plus my 401k balance of around $900,000.
So bottom line I will have around $1600 guaranteed monthly plus the income I can derive from $900k that will probably be invested with Edward Jones.
For the last 10 years I have waited to be in this position and in truth I have more than I thought I would have. But is it enough. I would really like to keep the lifestyle we live now and I think I would need to have an income of at least $60k to $70k annually to fund it.
I'm sure many of you are in the same boat. I live in rural America where the cost of living is not high.
I have always said that when I'm 55 I would be out of the door but as it approches I guess I'm kinda getting nervous.
What do you think
DangerMouse
Thinks s/he gets paid by the post
Welcome, it looks to me that you have worked hard to retire financially stable.
My question for you is do you intend to access your 401k money before you are 59 1/2? If so, what is the plan for the access?
I also note you intend to invest the money from the 401k with Edward Jones. I'm curious why you have decided on that path.
My question for you is do you intend to access your 401k money before you are 59 1/2? If so, what is the plan for the access?
I also note you intend to invest the money from the 401k with Edward Jones. I'm curious why you have decided on that path.
Well from what I understand, I will have to roll my 401K money into an IRA then draw from it under the rules of 72T. Under those guidelines I believe I can draw a maximum of about 64k/year but I will only draw 50 to 55 k or about 6% on my investment.
I have a friend that is with Edward Jones and they have a local office.
That said, I am open to any advise or other opinions. I am a novice at this for sure, and I welcome your input.
I have a friend that is with Edward Jones and they have a local office.
That said, I am open to any advise or other opinions. I am a novice at this for sure, and I welcome your input.
Welcome TT,
If you leave your employer(retire) the year you turn 55 you can get at your 401K funds w/ no 10% penalty. If you roll over to an IRA - you will have to do 72t - more of a hassle.
What kind of expense ratio are you paying w/ Edward Jones. There have been some negative threads concerning them - I have never dealt with them so I don't know.
I would say you have enough to safely produce 45 - 55K - 60 -70K would be pushing it IMO.
Congrats on your near escape,
Donzo
If you leave your employer(retire) the year you turn 55 you can get at your 401K funds w/ no 10% penalty. If you roll over to an IRA - you will have to do 72t - more of a hassle.
What kind of expense ratio are you paying w/ Edward Jones. There have been some negative threads concerning them - I have never dealt with them so I don't know.
I would say you have enough to safely produce 45 - 55K - 60 -70K would be pushing it IMO.
Congrats on your near escape,
Donzo
REWahoo
Give me a museum and I'll fill it. (Picasso) Give
You did not say how much your combined SS benefit would be when you reach 62.
I think you're fine at 6%, since you only need maintain that rate for 7 years (55 to 62). Once you and your wife start collecting SS, you can reduce to 4% and be in the safe zone forever.
Welcome, and congratulations.
I think you're fine at 6%, since you only need maintain that rate for 7 years (55 to 62). Once you and your wife start collecting SS, you can reduce to 4% and be in the safe zone forever.
Welcome, and congratulations.
Donzo, my goal of 60 to 70k would be a combination of the return on my 900k investment plus my guaranteed retirement income of approx. 19.2k. That means I would only need to make 40 to 50k annually on my 900k investment. Do you think that is a stretch? That's why I'm here, to get other opinions.
I am not actually with Edward Jones yet. My company pays all fees with Vanguard until I retire. I'm certainly open to hear about other financial firms if they would benifit me.
I am not actually with Edward Jones yet. My company pays all fees with Vanguard until I retire. I'm certainly open to hear about other financial firms if they would benifit me.
Yes I forgot about Social Security. At 62, (seven years into early retirement) I will start drawing approx. 1400/month so I will be able to reduce my income from investments if neccessary.
My wife will not be able to draw SS because as a teacher she has never paid SS. Her retirement money comes from the Louisiana Teachers Retirement System and any benifit from SS from what I have paid into it would reduce her retirement income.
My wife will not be able to draw SS because as a teacher she has never paid SS. Her retirement money comes from the Louisiana Teachers Retirement System and any benifit from SS from what I have paid into it would reduce her retirement income.
Telly
Thinks s/he gets paid by the post
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Hi testtubes
I recommend clicking on the Advanced FireCalc tab, then looking for the classic version link after the first paragraph. The Classic Version puts everything on one page, making it easier to see what you are entering, minimizing mistakes, etc. SS amount entered is ANNUAL $.
Is 60 - 70K really the $ you want to cover expenses, or is that income in the wage sort of sense? Big difference.
I would suggest that you consider leaving your 401k at your employer for the time being, till you get up to speed on how/with who you want to invest it.
I recommend clicking on the Advanced FireCalc tab, then looking for the classic version link after the first paragraph. The Classic Version puts everything on one page, making it easier to see what you are entering, minimizing mistakes, etc. SS amount entered is ANNUAL $.
Is 60 - 70K really the $ you want to cover expenses, or is that income in the wage sort of sense? Big difference.
I would suggest that you consider leaving your 401k at your employer for the time being, till you get up to speed on how/with who you want to invest it.
Welcome to the board, TT. I merged your two topics into this combined thread.
I can't tell from your posts, but it looks like you may want to make sure you know what your expenses are before you decide how much that $900K "needs" to produce. Your plan looks fine but if you haven't already run the detailed expenses (not just a lifestyle estimate) through FIRECalc then you'll sleep better at night.
I think you're gonna hear a lot of feedback about your thoughts on moving from Vanguard to E.J. If you have a "friend" at E.J. then I'd say that you need a new set of friends.
I can't tell from your posts, but it looks like you may want to make sure you know what your expenses are before you decide how much that $900K "needs" to produce. Your plan looks fine but if you haven't already run the detailed expenses (not just a lifestyle estimate) through FIRECalc then you'll sleep better at night.
I think you're gonna hear a lot of feedback about your thoughts on moving from Vanguard to E.J. If you have a "friend" at E.J. then I'd say that you need a new set of friends.
USK Coastie
Recycles dryer sheets
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TT welcome to the boards. I'm new here myself. I too would recommend a long talk with your 401K rep. Depending upon how the 401 is set up you could take your funds from it with out the 10 % penalty if the employer set it up that way. If not you'll end up paying the 10 %. BTW if your 401 is in Vanguard you could probably roll it to a self managed account in Vanguard for a lot less than having EJ do it. DW is a former BOA for EJ and IMHO they are good at helping people buy and hold investments who need the help. You're already most of the way there being in Vanguard.
testtubes said:
Welcome testtubes. I would second the advice to run your numbers through FIRECalc, but before you do that you should get a better handle on your living expenses. The wording in your post leads me to think that you are not all that sure of how much you willl need to retire. Also note that whether your pensions are COLAed or not will make a difference.
TT,
With the pensions, SS and your savings the 70K should be doable
As suggested earlier - it would be a good idea to leave your 401K w/ Vanguard. They are low cost, solid and won't try and "churn" you.
They have all the investment choice needed to be well diversified too.
With the pensions, SS and your savings the 70K should be doable
As suggested earlier - it would be a good idea to leave your 401K w/ Vanguard. They are low cost, solid and won't try and "churn" you.
They have all the investment choice needed to be well diversified too.
TT,
Since everyone was giving you the thumbs up without refering to a FIRECalc run I decided to make a couple for you. If your pension is COLAed you will have a 79.2% success rate of sustaining a lifestyle requiring $70K/yr (adjusted for CPI) for 40 yrs. If it is not COLAed that success rate drops to 62.5%. These success rates do not instill in me a great level of confidence, therefore I will repeat my suggestion to you to determine with greater accuracy the amount of your expenses and make some FIRECalc runs for yourself.
jdw_fire
Since everyone was giving you the thumbs up without refering to a FIRECalc run I decided to make a couple for you. If your pension is COLAed you will have a 79.2% success rate of sustaining a lifestyle requiring $70K/yr (adjusted for CPI) for 40 yrs. If it is not COLAed that success rate drops to 62.5%. These success rates do not instill in me a great level of confidence, therefore I will repeat my suggestion to you to determine with greater accuracy the amount of your expenses and make some FIRECalc runs for yourself.
jdw_fire
dumpster56
Thinks s/he gets paid by the post
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Welcome Testtube.
It really looks doable.
You have medical a 1600 guranteeeee right now, what about your mortgage? Any??
Part time fun work?
Glad to have you aboard!
It really looks doable.
You have medical a 1600 guranteeeee right now, what about your mortgage? Any??
Part time fun work?
Glad to have you aboard!
Answering a few questions:
Is my pension COLAed? Im guessing that is asking me if my pension is adjusted for cost of living. The answer would be that my wifes portion is ($1300), but the Louisiana Teachers Retirement Program only makes small adjustments once every 5 years or so. My portion which is really an old annutiy that I cannot cash in ($300) does not adjust for cost of living
Do I have a morgage? no, the home has been paid off for years. I do however, have a motorhome that I am paying on.
Is my pension COLAed? Im guessing that is asking me if my pension is adjusted for cost of living. The answer would be that my wifes portion is ($1300), but the Louisiana Teachers Retirement Program only makes small adjustments once every 5 years or so. My portion which is really an old annutiy that I cannot cash in ($300) does not adjust for cost of living
Do I have a morgage? no, the home has been paid off for years. I do however, have a motorhome that I am paying on.
testtubes said:
Based on the way you describe the pensions I would use the not COLAed results.
jdw_fire said:
Now there are 2 ways to increase this success probability. 1) increase the size of your portfolio or 2) decreases your yearly expenses, so...
jdw_fire said:
Sam said:
I know what he said but the way he said it ...
testtubes said:
Leads me to believe it is a guesstimate, and considering his self proclaimed level of financial expertise this could be a number based on the "convential wisdom" of needing 80% of current income which we all know is not the way to arrive at how much you need in retirement.
JDW-Fire, I would be very interested in what the majority of people in here consider the real percentage of pre-retirement income is really needed in retirement.
My pre-retirement income is $75,000 and my wifes pension is $1250/month. Of my 75k, I now put 11% in 401k. So I know once I retire, I would have the same amount of money to live on if I could generate $61,125 with my investments. (75k minus 11% in 401k, and 7.5% to SS.)
I have an annuity that will pay me a little over $3k per year so if my 900k investments can generate 58k a year, I will have the same amount of income after retirement, that I have before retirement when you add in my wifes pension.
Now I know you are supposed to need less money after you retire but we want to travel and do a few of the things in life we never had a chance to do. And that will take money.
My pre-retirement income is $75,000 and my wifes pension is $1250/month. Of my 75k, I now put 11% in 401k. So I know once I retire, I would have the same amount of money to live on if I could generate $61,125 with my investments. (75k minus 11% in 401k, and 7.5% to SS.)
I have an annuity that will pay me a little over $3k per year so if my 900k investments can generate 58k a year, I will have the same amount of income after retirement, that I have before retirement when you add in my wifes pension.
Now I know you are supposed to need less money after you retire but we want to travel and do a few of the things in life we never had a chance to do. And that will take money.
brewer12345
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
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TT, you will almost certainly pay less in taxes in retirement. On the expense side, I would suggest tracking your expenses for 6 moths to get asense of what you spend on what stuff. That way you an mock up a post retirement budget pretty easily. Right now, you are just taking shots in the dark.
Alex
Full time employment: Posting here.
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A few things:
1) You should re-think the whole Edward Jones thing IMHO.
2) calculate a realistic budget so you know your expenses.
3) go to firecalc and run the numbers yourself.
I ran the advanced firecalc and unless you plan on augmenting your income with some part time work, at 60k/year you are coming up more than a wee bit shy. However, if you can live on 50k from your investments - I came up with a 97.4% success rate.
at 60K it drops to 76.9%
what age are you planning on tapping your soc sec benefits? I used 12k per year starting at age 62.
Whatever you decide, you are very close. Congrats!
1) You should re-think the whole Edward Jones thing IMHO.
2) calculate a realistic budget so you know your expenses.
3) go to firecalc and run the numbers yourself.
I ran the advanced firecalc and unless you plan on augmenting your income with some part time work, at 60k/year you are coming up more than a wee bit shy. However, if you can live on 50k from your investments - I came up with a 97.4% success rate.
at 60K it drops to 76.9%
what age are you planning on tapping your soc sec benefits? I used 12k per year starting at age 62.
Whatever you decide, you are very close. Congrats!
testtubes said:
The majority of people (judging by the posts I read) don't use a "percentage of pre-retirement income" as a guide to how much they will need in retirement. What they do is what I (and brewer & alex) suggested and that is figure out what your current expenses are, analyze them to determine what is going to change (and by how much) in retirement, then pad it some if you think it is necessary and sum everything up to get your retirement budget. If you really want to know the percentage number for the participants of this board (for entertainment purposes) search for the poll that was taken not too long ago asking exactly that.
