Please check my math

[jastew]

Hello all. I've been lurking here for about 5 years and made very few posts. I've learned a lot here and thank you all for your wisdom/experience.

I'm getting very close to pulling the trigger and have run many calculators and run FIRECalc many times, using many different scenarios. Everything points to a successful retirement but I have a nagging feeling I'm missing something. Might just be cold feet.

Anyway, I'm outlining my situation below and would appreciate it if you guys would offer your opinion.

I'm 60, wife is 57. I'm still working, she's retired. We have $1.7M in various accounts, mostly tax deferred. No debt.

I have current monthly pensions totaling $5300 (after taxes, after health insurance premiums). The Mrs gets about half of that when I die (Survivor Benefit).

Health insurance premiums are around $460/mo. I'm eligible for Tricare but am hesitant to use it due to physician availability. But if push comes to shove, I could do that and save another $460/mo.

My expenses are around $4k a month. This is steady state, normal living expense, not including big purchases (cars, house repairs, vacations, etc).

The most extreme scenario I've run in FIRECalc is spending $150k, for 40 yrs. That gives me a success rate of 96.4%. That sounds great to me but those numbers just don't seem possible.

I haven't included SS in any calculations, hoping that will be icing on the cake.

I would like to live off pensions as much as possible and use the savings as a big purchase well to go to as needed and then leave behind as much of the nest egg as possible for the Mrs when I die.

Thanks for reading this far and I look forward to your comments.

 

[pb4uski]

That FIRECalc result seems plausible. $1.7m at a conservative 3.75% WR is $64k a year... plus your pension is $64k a year... that's $128k a year.... and then I presume that you have SS on top of that.

You're only spending $48k a year so you have a lot of room for additional spending.

 

[Montecfo]

First welcome!

Second, I do think it is cold feet based on what you have shared. You have very ample resources compared to your needs. Not considering SS in your calculations is a good idea, in my view. I do the same thing, viewing that and my wife's micro pension as longevity insurance.

It is always good to check and recheck your numbers and run through multiple calculators. But it appears you've done that and it sounds like you have addressed things adequately. Best wishes for a very comfortable retirement!

 

[HI Bill]

My understanding that you're planning on an annual budget of $150K (including taxes, with health care already deducted), but that $5300x12, or $63.6K is coming from a pension. That leaves an annual withdrawal of $86,400. This amount divided by $1.7M equates to a WR of 5.08%. I ran FIRECALC for 40 years, including your pension in the SS box, and came up with a success rate of only 2.7%. If only entering the $86,400 spending, and no pension under SS, I obtained a success rate of 56%. I assumed constant spending, and a total market portfolio. I'm assuming that you entered something wrong in FIRECALC. Should be closer to 3.5 to 4% WR, or about $59.5K-68K.

 

[Dtail]

You are good to go, but let's get more specific if you want to get more comfortable.
Can you estimate the SS for each one of us, plus an estimate of large expenses?
Then we will get you a maximum spending in Firecalc and you will be good to go and should be comfortable at least from a financial sense.

 

[Dtail]

My understanding that you're planning on an annual budget of $150K (including taxes, with health care already deducted), but that $5300x12, or $63.6K is coming from a pension. That leaves an annual withdrawal of $86,400. This amount divided by $1.7M equates to a WR of 5.08%. I ran FIRECALC for 40 years, including your pension in the SS box, and came up with a success rate of only 2.7%. If only entering the $86,400 spending, and no pension under SS, I obtained a success rate of 56%. I assumed constant spending, and a total market portfolio. I'm assuming that you entered something wrong in FIRECALC. Should be closer to 3.5 to 4% WR, or about $59.5K-68K.

His natural budget is not 150k. It sounds like he kept running different scenarios including this extreme scenario. 150k vs. 48k.
He can confirm.

 

[jastew]

You are good to go, but let's get more specific if you want to get more comfortable.
Can you estimate the SS for each one of us, plus an estimate of large expenses?
Then we will get you a maximum spending in Firecalc and you will be good to go and should be comfortable at least from a financial sense.

Good idea. I need a new roof in 8-10 yrs and new HVAC systems in 3-5 yrs. Not sure amounts.

Don't know my wife's SS. Mine is $2,059 at 62, $2,993 FRA, and $3,827 at 70.

 

[jastew]

His natural budget is not 150k. It sounds like he kept running different scenarios including this extreme scenario. 150k vs. 48k.
He can confirm.

Correct. $150k was a WAG. I can't envision anyway of spending that much unless I develop a drug habit.

 

[Dtail]

Okay, I put your numbers in Firecalc.
Assumptions used
38 years of retirement (until spouse is 95)
50/50 AA portfolio (you didn't say the allocation)
50k lump sum expense for big ticket items in 5 years
45k SS for you at age 70 (nothing for the wife)

Results: (Effectively conservative with no SS for the wife)
If Pension is not COLA'd = 107k maximum spending
If Pension is COLA'd = 139K maximum spending

Assuming your 48k spending is accurate, you can see that you have lots of wiggle room in the numbers.

I retired at 57 and it has been great. Never bored and will never work again.

 

[jastew]

Okay, I put your numbers in Firecalc.
Assumptions used
38 years of retirement (until spouse is 95)
50/50 AA portfolio (you didn't say the allocation)
50k lump sum expense for big ticket items in 5 years
45k SS for you at age 70 (nothing for the wife)

Results: (Effectively conservative with no SS for the wife)
If Pension is not COLA'd = 107k maximum spending
If Pension is COLA'd = 139K maximum spending

Assuming your 48k spending is accurate, you can see that you have lots of wiggle room in the numbers.

I retired at 57 and it has been great. Never bored and will never work again.

Thank you, Dtail. Pensions are COLA'd but even if they weren't, it looks like I've got a lot of runway with $107K to spend.

I don't ever see myself being bored. I was talking this over with the Mrs. last night and she asked what I would do with my time. By the time I finished listing my hobbies that have been on the back burner for years, it became obvious my hobbies were going to be my new full time job.

 

[jastew]

One last question. I assumed that inputs in the "Pension Income" amounts were gross (before tax). Is this correct?

 

[REWahoo]

^ Yes.

 

[jastew]

Thank you to all who replied.

 

[jastew]

I just submitted my resignation. Negotiating a last day with boss. Thanks to all who gave me the comfort level to pull the trigger.

 

[eyemin]

I just submitted my resignation. Negotiating a last day with boss. Thanks to all who gave me the comfort level to pull the trigger.

Well done, Congratulations!

 

[Lawrencewendall]

Been FIRE for a year now. I went through the same feelings you're experiencing. I ran the number sooooo many times, second guessing myself and all the calculators and finally just pulled the trigger. This will be my first full year in FIRE and I've managed to squirrel away 2k a month of surplus. Guess my numbers weren't wrong after all. I've seen numerous posting here where the OP wishes they did it earlier. Jump in, the water is fine!

 

[jastew]

Been FIRE for a year now. I went through the same feelings you're experiencing. I ran the number sooooo many times, second guessing myself and all the calculators and finally just pulled the trigger. This will be my first full year in FIRE and I've managed to squirrel away 2k a month of surplus. Guess my numbers weren't wrong after all. I've seen numerous posting here where the OP wishes they did it earlier. Jump in, the water is fine!

Thanks eyemin and Lawrencewendall. I'm kinda giddy right now. Don't know if that's nervous energy or excitement.

 

[kimcdougc]

Congratulations! Don't make the day too far away...life is waiting for you out there and the alarm clock needs a break too.

 

[Dtail]

I just submitted my resignation. Negotiating a last day with boss. Thanks to all who gave me the comfort level to pull the trigger.

Congrats. You got this.
Stay healthy and it will be the best years of your life.

 

[HI Bill]

Been FIRE for a year now. ...This will be my first full year in FIRE and I've managed to squirrel away 2k a month of surplus.

Time to Blow that Dough ! Robbie...any suggestions?

 

[Lawrencewendall]

Time to Blow that Dough ! Robbie...any suggestions?

DW is not haven't any problems with that!