Retired mid 2017-am I okay financially

[silvia]

Hi Everyone- I was here 4 years ago and asked about whether I would be financially stable if I retire.

I am finally retired as of July 2017 and am enjoying life alot as I have time to do things.

I have spent many countless days reading all I can b4 retirement. Now since I am retired, I am not sure if I am financially stable. Emotionally and Mentally, I am doing very well. I gave myself a retirement gift of traveling to Tanzania to summit Mt. Kilimanjaro, go on a safari, see the Gorillas and relax in Zanzibar. It costed about 8k .

Here is my financial situation:

57 years old
Pension is $56, 200 annually with 2 % adjusted simple cost of living and 85% income protection
Pension 2 is $ 6000 annually for 10 years, NO Cola

I have about 500k in Vanguard (403B)
I have about 100k in Tiaa which I can withdraw at any time without penalty. My back up fund for traveling.
Traditional and Roth IRA is 25k
I owe 8k on my principal resident with the last payment in 4 months. Market value is 950k to 1 mill
I have a HELOC of 17k

I have not tapped into my 403b yet but may need to eventually.
My employer is subsidizing my health benefit for 5 years until I reach 61 years old. Subsidy is $500 per month. I am paying Kaiser $200 out of pocket each month for health benefit.

I travel a lot which is one reason I wanted to retire early.

Prior to retirement, I ran the numbers many times including Firecalc . Now I am not sure anymore.

I am loving my retired life. I spend time at the Gym, watching movies with the movie pass ,hanging out with my boyfriend, reading and traveling.

 

[Bigdawg]

it all depends on your expenses.

 

[silvia]

Traveling will be about 10 to 15k per year. I can cut on other things such as going out to eat.

 

[joeea]

Pension is $56, 200 annually with 2 % adjusted simple cost of living and 85% income protection

What does "income protection" mean in the context of a pension?

Traveling will be about 10 to 15k per year. I can cut on other things such as going out to eat.

That doesn't indicate your expenses. And only by knowing your monthly expenses could anyone judge your retirement fitness.

For example, if you spend only $1000/month you will likely be just fine.
But if you spend $20,000/month you likely don't have enough.

I suspect you spend somewhere in between.

At one time you had planned to move back to Canada for your retirement. Did you do that?
Will you be eligible for any Social Security benefits?

Now since I am retired, I am not sure if I am financially stable. Prior to retirement, I ran the numbers many times including Firecalc . Now I am not sure anymore.

So tell us the numbers you used.
What does Firecalc tell you now? Why are you unsure?

 

[silvia]

Joeea,

thanks for your reply.

No social security benefits what so ever.

it seems like the only reason to move back to Canada would be the high cost of health premium in the USA. As my employer is subsidizing me for 5 years, I should be okay. I am also looking into living overseas between 61 and 65 . Then be care in the US for my medicare benefit.

Firecalc said I should be fine but I am not sure if I will be going on luxury vacations or not.

Income protection....oops it should be purchasing power protection:

"Your retirement benefit has additional purchasing power protection. Purchasing power is a measurement of how your retirement benefit keeps pace with inflation. For example, if your benefit stays the same but prices double, your purchasing power is only 50 percent of what it originally was.

Purchasing power is set at 85 %.

to be honest, I really don't understand what it means and whether this is a great benefit or not

 

[RunningBum]

I guess you don't want to give your overall expenses? You've been asked twice. That's a huge factor. Your business whether you want to or not, but nobody here can tell you anything useful without that, and you shouldn't even be asking for opinions without giving critical data.

Note that the stock market did really well since July 2017, in the 10% range I think? A diversified portfolio will do somewhat less, but still should have nice returns. If you are in worse shape now than you were when you retired, you're either investing poorly, or spending way too much. A lot of people are worried when they retire that the market will immediately tank and their plan will be in trouble. Instead, you've had a great run in the last 8 months.

 

[joeea]

Firecalc said I should be fine but I am not sure if I will be going on luxury vacations or not.

Just add the cost of yearly luxury vacations to your expense estimate and run it through Firecalc again, then you will have a better idea.

If you don't tell us your anticipated expenses, we have no way to help any further.

Good luck.

Income protection....oops it should be purchasing power protection:

"Your retirement benefit has additional purchasing power protection. Purchasing power is a measurement of how your retirement benefit keeps pace with inflation. For example, if your benefit stays the same but prices double, your purchasing power is only 50 percent of what it originally was.

Purchasing power is set at 85 %.

I still have no idea what that means. Maybe they are guaranteeing that your pension remains at least 85% of your current full pension after inflation effects?

 

[silvia]

I don't know what my anticipated expenses are. I have never kept record of my expenses. I guess maybe I am wondering what the most I can spend would be. I like to travel a lot but if I don't have enough money, than I would have to do less traveling and spending.

I will go and try different numbers on firecalc again.

Probably cold feet as I am quite a newly retired person and not knowing the cost of health premium worries me. Its really hard to budget for the unknown.

Worse case scenario would be to sell my house and live in a lower cost of living area.

 

[REWahoo]

I don't know what my anticipated expenses are. I have never kept record of my expenses.

This would worry me more than not knowing my health premium cost as health insurance is only one subset of your expenses.

Take a close look at this, especially items #1, 2, and 3: http://www.early-retirement.org/for...-answer-before-asking-can-i-retire-69999.html

 

[Dtail]

Just curious. Since you ran Firecalc, one of the absolutely necessary inputs is your total expenses. If you had a successful result, what was the expense input to achieve that result?

 

[golfnut]

Well, you have been retired since July 2017. Have your monthly dist. of your 2 pensions been enough to live on or have you been dipping into your other sources for income?

If your pensions have been enough, then $62,000 is enough - correct?

 

[joeea]

I don't know what my anticipated expenses are.

I will go and try different numbers on firecalc again.

If you cannot even estimate your expenses, then Firecalc is useless.
Yet you already indicated that Firecalc says you are okay.

 

[ivinsfan]

If you came here and asked this same question four years ago, multiple posters would have told you to track your expenses before pulling the plug. Is there a reason you have made no effort to track them? Everyone has some rough idea of what they spend yearly.

 

[Aerides]

After you get a true clue on your expenses then you can answer your question. It's, not hard to do, just go back through your last two to three years of actual data, from your bank/credit cards, etc.

But resist the urge at first to go "oh well i can cut that back" or oh that was before I retired I don't really spend that now" because something new will take its place.

Given you are a single person with a healthy pension, the short answer is you're probably ok, but that's a lot of house, so I'm guessing it comes with a lot of upkeep and taxes.

So if you run your numbers and are close but not "awesome" I'd look to downsize if you need to free up some capital. I know, some areas of the country have a high cost of living, but a million dollar house for one person is probably still more than needed, unless you need to live on one of the best 20 streets in the country.

 

[exnavynuke]

With $608k net investment assets (after paying off the HELOC), plus your two stated pensions, firecalc says this:

Looking for a spending level that will result in 95% success rate . . . . . . . . . . . . . . . [done]

A spending level of $82,991 provided a success rate of 95.3% (107 total cycles, of which 5 failed). This spending level is 13.65% of your starting portfolio. (Your spending is assumed to come from any Social Security and pensions you entered, as well as from the portfolio.)

Here is a plot of the success rate of this spending rate (in the center) and a few that are smaller and larger. The vertical axis shows the success rate.

If you spend a lot less than that, you should be fine, if you spend a lot more than that you'll probably not be fine, if you spend about that much you'll probably be okay but might have to make adjustments up or down in your spending to be sure.

 

[Dtail]

If you cannot even estimate your expenses, then Firecalc is useless.
Yet you already indicated that Firecalc says you are okay.

+1 see my earlier post.

 

[silvia]

Good, 82991 K is more than I spend per year.
No more mortgage after 4 payments.

Thanks all.

 

[pb4uski]

I don't know what my anticipated expenses are. I have never kept record of my expenses. ....

Good, 82991 K is more than I spend per year. ....

If you don't know what your expenses are and have never kept a record of your expenses then how do you know that $83k is more than you spend per year?

 

[silvia]

Just guessing 83k is enough. I pay using credit card and transfer money from my bank to pay bills. Never had to dip into my retirement money other than my regular pensions. It just seems like a lot of money.

 

[REWahoo]

Just guessing 83k is enough.

In your OP you asked if you were OK financially. You've been given a lot of advice on how to find out, but don't show any inclination to do anything beyond guessing.

Why ask the question if you aren't willing to expend the effort to get the answer?

 

[ivinsfan]

If you don't know what your expenses are and have never kept a record of your expenses then how do you know that $83k is more than you spend per year?

I'm curious so I looked at the OP's original thread it was actually 10 years ago not 4..if you haven't bothered to check your expenses in 10 years you are obviously never going to record your yearly expenses. I'm curious why you keep coming back and asking..the same question? No one here knows the answer..

 

[Go-NoGo]

Some credit card companies give you the option of downloading your annual charges and then break them out by category (food, hotels, Gas). Categories are not perfect but might be a good place for you to start to estimate what you are/were spending prior to retirement and what you can eliminate once retired. Good luck in your retirement!

 

[Aerides]

Guessing will leave you with a guess answer from all of us. 83k sounds like a lot of money to most anyone, but oh wait, $20k in taxes, $15k in medical, $10 in travel, $5k in utilities, $5k in HOA (that $1m house surely has an HOA), and you're down to less than $30k for discretionary. All those numbers are guesses of course.

You could fail, you could run out of money in 10 years, be unable to work again, and become destitute.

Or you could be fine.

Either pull some bank statements and do a little math, or don't. But please, this is bordering on trollish behavior if you keep asking but not doing the work.

Your opening post says you spent years reading up on ER.. how did you not do this step? It's mind boggling and not entirely unbelievable.

 

[RetireAge50]

I think you are good. No need to track expenses in detail in my opinion.

Since retirement you are living within your pension income and you have a good net worth.

Congratulations on retirement. Enjoy it.

 

[Jerry1]

Try using the i-orp.com calculator. I had a similar sense as you in the beginning of my quest to retire. I didn't really think in terms of my expenses, but wanted a number of what I could spend based on my financial situation and then I could get my head around whether or not I could live on that amount of money. I ended up doing a better job of understanding my expenses using the Fidelity Retirement Planner, but then I stumbled upon i-orp. I was trying to answer the question about which funds should a draw down first (a spending plan). But when I went to i-orp, I put in my investments and expected cash flow and it gave me a result in terms of how much that would support in terms of annual spend. By that time, it just confirmed what I had already learned, but it was really the answer I wanted in the early stages of retirement planning.