Talk me off the ledge, please!

[DawgSavr]

As others, I have been reading many of the experiences and thoughts on this site. Very inspiring! Although I am relatively new, I have contributed comments within various forums but thought I should introduce myself, as well as ask for a bit of help in talking me off the ledge of the one more year syndrome.

My DW and I, met and dated since juniors in high school, married right after college and been together for 36 years, two wonderful kids both of whom are making their own way. I'm 58 and my DW is 6 months younger. My DW been the CEO of our home since we had children. I worked 2 jobs initially until my career started to take off in the '90's and I rose through the ranks of Technology Executive Leadership as an Officer in 3 companies within the Investment Management, Healthcare and Banking industries.

We have been very fortunate to make a very nice life together and have accumulated a very nice nest egg. We have lived modestly, earned, saving and invested to a NW of approximately $4.4MM which includes our home and with this crazy market, even here in the midwest, is valued at ~$740K. Since it is valued that high, I am in the process of finalizing a no cost, HELOC to have added emergency, home improvement or investment liquidity to help my son with his first home if he so needs it.

The remainder of our assets are diversified through various low cost index mutual/ETF funds and cash. Split as follows: Cash @~10%, International/US Bonds@~30%, International/US Stocks/Alternatives@60%. Approximately 3% in No Tax (Roth), 30% is in Taxable (Brokerage) and the remaining 67% in Non-Tax (401K/IRA) Investments.

Using mySSA, and assuming I retire at the end of this year, with no more additional income, we project ~$65K annually in SS combined, assuming my wife will get ~50% of my SSA as Spousal when she turns 67 and I take mine at 70. This does not include a potential haircut to SSA unless the mySSA site is already figuring that in for 2033 and beyond. I am eligible for a small pension with my current employer of ~$17K which I plan to delay until full retirement age at 65, it is COLA adjusted and accounts for a survivor payout to my wife if something should happen to me.

If I stay 3 more years, I would be eligible for subsidized health care for my wife and I, with benefits carrying over to assist with Medicare Advantage when we become Medicare eligible. Otherwise, if I do pull the cord at the end of the year, we are on our own with Healthcare funding of which I have fully funded in our plan anyway/not counting any cost sharing savings if we can keep our MAGI under the limits. Staying 3 more years would be icing on the cake if I can find the motivation to do so. Which is very slim at this point.

I did our investment/planning until we turned 50. As we started to think about early retirement and moving from accumulation to the spending phase, especially around making sure we manage the spend effectively with taxes, we decided to use a fiduciary. We do use Creative Planning as our Wealth Provider and have been pleased with their assistance on Estate, Risk and Wealth Planning thus far. We do pay a fee and figure it is a little south of 1% when figuring both the advisor AUM and fund fees combined. Advisor tells me I am only working because I want to and FireCalc and Personal Capital support that advice as well.

We have zero debt and our base living "non-discretionary" expenses are ~$60K a year. This does not include Healthcare, Dental or Vision of which I have in our plan to be at $30K/annually in perpetuity. Vacations, Hobbies and other costs are included in our plan but I call them "discretionary".

Regarding our post megacorp life, we both share a passion for remodeling, gardening, landscaping, traveling to various state and national parks, hiking, biking, fishing. My brother, who has his own cabinet making business which he is the business, has asked me to help him. I think that would be fun, likely will make enough money to keep funding my own hobbies and shop. I want to help my son with learning how to build his home maintenance skills once he decides to settle down. He shows signs that is what he wants to do. We will see. I'm already helping my daughter and son-in-law with various DIY projects and having fun teaching!

Yes, this has been a long story, probably more for me to convince myself that "Yes!" ... It's time to retire and move on to the next phase! I want to target year end 12/31 as my last day. Would likely need to give ~3 months notice so my time to make a decision is close. A little nudge from the "experienced audience" would be appreciated!

 

[ERD50]

I want to target year end 12/31 as my last day. Would likely need to give ~3 months notice so my time to make a decision is close. A little nudge from the "experienced audience" would be appreciated!
DawgSavr is online now Report Post

I skimmed a bit, but if this is right (invest-able assets are NW - home). and a very conservative 3% inflation adjusted withdraw rate gives:

(4400000 − 740000) ⋅ 0.03 = $109,800

Which sounds like it covers you even before SS?

What are you contractually obligated to for notice? Don't give a day more, there's just no point.

And drop the advisor. An ~1% means your advisor makes ~ 1/3rd what you do from your portfolio! Some $36,000 a year! All you need is a few broad index funds along the AA you have, and you're good. Maybe an occasional fee-only hourly check up if needed.

Have fun!

-ERD50

 

[MRG]

You are well set. There's no reason to give Megacorp anymore of your life. If you want to wait do so, but you can be free before if you choose. As far as 90 days notice it's a good thing but not really needed. If your Megacorp wanted to RIFF you it would happen in a blink. Any banked PTO?

 

[Vincenzo Corleone]

I skimmed a bit, but if this is right (invest-able assets are NW - home). and a very conservative 3% inflation adjusted withdraw rate gives:

(4400000 − 740000) ⋅ 0.03 = $109,800

Which sounds like it covers you even before SS?

What are you contractually obligated to for notice? Don't give a day more, there's just no point.

And drop the advisor. An ~1% means your advisor makes ~ 1/3rd what you do from your portfolio! Some $36,000 a year! All you need is a few broad index funds along the AA you have, and you're good. Maybe an occasional fee-only hourly check up if needed.

Have fun!

-ERD50

My post doesn't help the OP any, but I just wanted to say that I'm heartened that ERD50 considers a 3% WR "very conservative" - and with the word "very" underscored. At 55 - close to the OP's age, and with some other finance-related things in common with the OP - and taking current market valuations into consideration, I was preparing to drop to 2%-2.5%.

Sorry, OP. Didn't mean to hijack your thread.

 

[Unpaintedhuffhines]

You sound ready to me. Megacorp will be just fine. Tell them you are going to retire and work on a transition plan, but no need to give 90 days notice. Sounds like you have something to do after retirement as well - get after it!

Oh, if you want to keep the FA, negotiate some sort of flat annual fee with them and make sure you know exactly what they do for you. The % of assets is great for them, but not great for you - it takes no more work to manage $2M than it does $5M.

 

[RetireeRobert]

Get off the ledge. You are good to go.

As to a "safe" withdrawal rate on your net investable assets of over $3.6 million, you can do 2% and produce income of $72,000 annually. Heck, you could put the $3.6 million in a fund of stocks of quality companies with growing dividends, such as DGRO, and get that 2% current income stream without any principal withdrawals (DGRO current yield today right on 2%). Then your principal would be inflation protected, and the income stream would be inflation protected and growing as well.

Congratulations on getting yourself in such an enviable position.

 

[Souschef]

I love the bucket analogy. If your FI bucket is full, and it sounds like it is, then if your BS bucket is full, also, retire.

 

[jollystomper]

If I stay 3 more years, I would be eligible for subsidized health care for my wife and I, with benefits carrying over to assist with Medicare Advantage when we become Medicare eligible. Otherwise, if I do pull the cord at the end of the year, we are on our own with Healthcare funding of which I have fully funded in our plan anyway/not counting any cost sharing savings if we can keep our MAGI under the limits. Staying 3 more years would be icing on the cake if I can find the motivation to do so. Which is very slim at this point.

This is the only area you mentioned that you should be sure to do a thorough investigation. I worked long enough to get the subsidized retiree healthcare (including the option to subsidize future Medigap/Medicare Advantage premiums). In our case we would not be eligible for ACA subsidies, so the ACA policy premiums (more than double the subsidized) the and deductibles (5x the subsidized) were enormous compared to the subsidized health care. In addition, almost none of our doctors that we had built a history with accepted ACA policies, so it would have meant finding all new providers.

If these do not apply then you are likely good to go in my view. But given that medical will be the largest and most unknown uncontrollable retirement cost, for us it was worth me working long enough to be eligible for the Megacorp benefit).

 

[Biker_on_FIRE]

Like others have said, you seem well positioned to retire. I'll disagree with some of the others that say give the minimum amount of notice - if you like your colleagues then you should give what you would deem to be sufficient notice for a good transition.

 

[travelover]

Work is trading time for money. There comes a time when you are trading time that you will never get back for money that you will never spend.

 

[Luvtoride]

Work is trading time for money. There comes a time when you are trading time that you will never get back for money that you will never spend.

Travel lover, very well put!
I am going to keep that quote and refer to it often.
Do you charge royalties?
Thanks.

 

[travelover]

........Do you charge royalties?......

No, but I do accept free beer. I've private messaged my FAX number. Be sure it is cold before you hit send.

 

[RetireeRobert]

Work is trading time for money. There comes a time when you are trading time that you will never get back for money that you will never spend.

+1. Perfect quote. You do deserve royalties for it!

 

[RetiredHappy]

Using mySSA, and assuming I retire at the end of this year, with no more additional income, we project ~$65K annually in SS combined, assuming my wife will get ~50% of my SSA as Spousal when she turns 67 and I take mine at 70.

I believe under the new rules, your spouse cannot get spousal benefits until you file for yours. So if you file at 70, she can only start collecting spousal benefits then. Alternatively you can file at 67 and she can then collect spousal benefits at the same time.

 

[pb4uski]

^^^ Yes. If she isn't entitled to any SS based on her own work record then she won't get anything until the OP files. Good time to spend some time with opensocialsecurity.com methinks.

 

[Bamaman]

Congratulations on your long term planning and the ability to execute that plan.

Not only have you prepared fiscally, having the financial advisor hopefully has given you a direction for the future. Even retirement can be a part time job just managing investments and taking care of personal business.

And I'm especially glad you've obtained the skills to keep yourself busy. So many people today cannot do anything for themselves, much less build and do heavy maintenance at home. I'm a chronic builder too, and have so much to look forward to in retirement.

As has been said, you are good to go. Have a great life.

 

[HarveyS]

We have zero debt and our base living "non-discretionary" expenses are ~$60K a year. This does not include Healthcare, Dental or Vision of which I have in our plan to be at $30K/annually in perpetuity. Vacations, Hobbies and other costs are included in our plan but I call them "discretionary".

A few thoughts to consider:
1. mySSA may be overstated when you consider a few years with $0 earnings if you quit today.
2. 3% of your nest egg (as ERD noted) is $109k. That is likely partially taxable so you might only end up with ~$90k (assuming 20% fed and state tax combined). That puts you close to your stated "non-discretionary" plus healthcare. Leaves $0 for hobbies, etc.
3. Don't mean to pick on you, so please take this for what it is. Healthcare, dental, vision are "non-discretionary". Not sure why you would have this separate and floating somewhere between "non-discretionary" and "discretionary". Maybe it is to place a different inflation rate on that cost category?
3A. Healthcare, vision and dental costs have been the highest surprises for me when I RE'd. Especially dental
4. Go back to managing your holdings yourself (as others have said).
5. Re-evaluate your annual budget needs. What have you really spent each year in the last 5? I'd start with Gross Income - Amount Saved = Amount Spent. This will be the upper bound of spend as it includes income taxes and Social Security. Based on the career you described (and congratulations on that), I would have expected your nest egg to be bigger. Either your earnings were lower than I have guessed, you had terrible investment returns or you spent more than you think. Again, please don't take this as me being nasty. In my experience many people underestimate their spending, claim one-offs for any spikes, etc. Please look at this closely to avoid a surprise when you retire.
6. Does your plan included new cars, weddings, new roof, etc. and so forth?
7. ERD took a look with 3% WR. Others on this forum have been just fine with WR's of 6% (I'm looking at you Robbie). You need to decide what is right for you.

Good luck, and I hope after additional analysis you get comfortable and join the RE group! It's scary to walk away from a nice salary, good title, respect in the industry, etc. To convince myself I looked at it as I had 20 good years left (physically fit, able to travel, golf, etc.) Did I want to give 1, 2 or 3 of those years ( or 5, 10 and 15% of this years) to Mega? And, I assumed years 1, 2 and 3 were likely the best years of the 20.

 

[RetiredHappy]

^^^ To add to the SS piece, I use the precise tool which is an app that you can download from SSA.gov. Anypia will give you actual dollar figure but you will have to manually enter each year's earnings. Anypia is updated each year to reflect the revised numbers based on new year's COLA. You will need to download this app every year. Howver, you only need to enter the earnings once and with the revised yearly app, you simply pick the same data file which you have previously entered.

Here is the link for the app:https://www.ssa.gov/oact/anypia/anypia.html

 

[Sunset]

... I want to target year end 12/31 as my last day. ..

OP - I think you have enough to retire now, but since you want to wait until 12/31 , I'd like to point out an optimization , if you wait until end of Jan/Feb, the income you make from those 1 or 2 months will probably be tax free income, due to the low amount.

Of course if you get a large severance or payout of sick leave unused this will alter the numbers and may encourage you to work 1 day in the new year, so those payouts are for the new year, resulting in low income, rather than added to current year.

I am thinking you picked 12/31 as an arbitrary date because it's the end of the year rather than for some income based reason (bonus earnings, etc).

 

[Gumby]

A little Van Halen for inspiration:

 

[brydanger]

I hate to be the downer in the room... but have you considered - as in truly thought through the scenario of "what if" one of you doesn't make it those 3 more years?

The simple premise of how possible that actually is and the idea of having wasted a single day/hour we could have spent focused on us, together, living our best life... (much less the guilt I would feel if it actually happened and I was too busy planning for some unknown date in the future to fully enjoy each day we had right now) - in my opinion, that's all it takes to walk in and say you're done, right now.

 

[street]

There is as always great advise from people that been have been there, done that here on ER. It really comes down to where your priorities lie.

It maybe one of the hardest decision you may ever have to make. I'm very sure with the job you had, you had many stressful calls/decisions you had to make. What ever you decide with your experience you will make the best of your move you make.

Good luck!

 

[DawgSavr]

ERD50, appreciate your insight. Your math is spot on and yes before SS and the small annual pension. Nothing requiring me to give 90 days notice. Our guidelines from HR are to start the retirement process 90-days prior to our end date to work through the process. I have been working in the Central Banking industry for the last 7 years and being an officer feel it would be the right thing to do. My reasons for leaving have nothing against the organization and want to leave under good circumstances. Never know, I may come back under a part-time individual consultant role if the desire suits me. I am taking the FA recommendation under strong advisement. Thank you.

 

[DawgSavr]

This is the only area you mentioned that you should be sure to do a thorough investigation. I worked long enough to get the subsidized retiree healthcare (including the option to subsidize future Medigap/Medicare Advantage premiums). In our case we would not be eligible for ACA subsidies, so the ACA policy premiums (more than double the subsidized) the and deductibles (5x the subsidized) were enormous compared to the subsidized health care. In addition, almost none of our doctors that we had built a history with accepted ACA policies, so it would have meant finding all new providers.

If these do not apply then you are likely good to go in my view. But given that medical will be the largest and most unknown uncontrollable retirement cost, for us it was worth me working long enough to be eligible for the Megacorp benefit).

Jollystomper. Yes. This is my biggest hangup. Stay 3 more years for subsidized healthcare for my wife and I or pull the cord and pay for it, to be free 3 years earlier. The latter has the most uncontrollable risk. Even thought about asking to move from an officer position to an individual contributor and roll through the next 3 years ... but after being in management/leadership for 25+ years, not sure if I have the skills for an individual contributor role that I would be happy with at the Bank for 3 more years. With $1M plus in Taxable/Brokerage as my ER Account, ran calcs to manage MAGI to purchase and found an ACA Bronze HSA Plan with our doctors and hospital for about what we would pay for subsidized. Yes, it is a HD plan and dental and vision will be an additional outlay for us but in other forums there has been some good advice on how to handle these costs as well. Thank you for your experience and insight!

 

[ERD50]

ERD50, appreciate your insight. Your math is spot on and yes before SS and the small annual pension. Nothing requiring me to give 90 days notice. Our guidelines from HR are to start the retirement process 90-days prior to our end date to work through the process. I have been working in the Central Banking industry for the last 7 years and being an officer feel it would be the right thing to do. My reasons for leaving have nothing against the organization and want to leave under good circumstances. Never know, I may come back under a part-time individual consultant role if the desire suits me. I am taking the FA recommendation under strong advisement. Thank you.

Interesting that the 90 days is a "guideline" but not a contractual requirement.

The way I might play that, is to give the contractually required notice (probably 2 weeks?), and if they come back with the 90 day "guideline", say OK, what's involved in that, can we short-cycle some of that? You (OP) don't need 90 days, what exactly does the company need it for, so you can both check those things off the list as you go. Maybe it gets cut to 3~4 weeks. If you still end up with the 90 days, nothing lost.

If presented that way, I don't think it would hurt your chances of future part time contract work. But based on your financial situation, and the fact that you have a long list of interests to keep you busy in retirement, I predict that within 30 days (or less), the idea of going back to work in any fashion at all will leave you laughing out loud, saying "what was I thinking? Trade my precious time for money I don't need? I don't even know "that guy" anymore!"

If you look back at other posts on the subject of notice time, you'll find a rare, almost 100% agreement that the company just wasted the extra time that was given. They still waited right to the end to search for a replacement, etc. Then begged the employee to stay on another 3 months (rinse-repeat).

Another way to look at it - if this company ever had to do layoffs, did the employees get a 90 day notice? Probably not.


edit/add: And if the company really needs 90 days, why isn't it in the contract?

Take your time on the FA decision, but you'll find plenty of posts where people saw the light, and realized their FA can't really do anything they can't do with a simple portfolio that takes almost zero time to set up and 'manage'. And if you do need help with something, and can't find good answers/refs here, probably makes the most sense to hire a fiduciary on an hourly basis as needed.

Good luck with everything, you look to be in a very good position. Enjoy!

-ERD50