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Am I on track to retire ??
10-19-2009, 11:45 AM
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#1
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Recycles dryer sheets
Join Date: Oct 2009
Posts: 85
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Am I on track to retire ??
I am 52 with plans to retire at 59-1/2. and currently have a 401K worth $500K. I also have a company pension that should be worth around 400K Lump sum when I go, plus a very good company health plan that will cover me and my family until medicare kicks in at 65. In addition I receive a monthly tax free disability check from uncle sam for $1300. And finally, I will begin receiving my Army Reserve retirement check at age 60 ($700/Month).
I am married with four kids (aged 14, 12, 9 and 8). I owe about $38,000 on my house which should be completely paid for by the time I reach age 59.
I need some expert opinions here,.....am I on track to retire at 59-1/2?
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10-19-2009, 01:53 PM
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#2
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Thinks s/he gets paid by the post
Join Date: Feb 2006
Posts: 4,872
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I'd say you have things well in hand. However, then you mentioned the kids and those are the wild card, college, weddings etc.
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10-19-2009, 02:08 PM
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#3
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Thinks s/he gets paid by the post
Join Date: Feb 2006
Posts: 1,183
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Sounds like it should work if you do not need to fund a lot of college expense and are happy with a simple decent life. How does the wife feel about it and does she help income wise?
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10-19-2009, 02:10 PM
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#4
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Recycles dryer sheets
Join Date: Oct 2009
Posts: 85
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Wife works at the local medical clinic, makes about 30K per year. She's 12 years younger than I am, so maybe I can convince her to continue working?
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10-19-2009, 02:10 PM
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#5
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Full time employment: Posting here.
Join Date: Feb 2008
Posts: 920
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Oversimplification = (400k+500k)*(4% rule) = $36k per year so monthly $3000+$1300+$700 = $5000/month gross with paid off house and health bennies. Solid.
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10-19-2009, 02:14 PM
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#6
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Recycles dryer sheets
Join Date: Oct 2009
Posts: 85
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And hopefully that 500K will grow in the next 7 years!!
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10-19-2009, 02:52 PM
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#7
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2005
Location: Chicago
Posts: 13,183
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rdjrn,
You really need to do a FireCalc run applying the info you gave us. As part of that, you'll be asked for an expense number, something you haven't provided and which folks are trying to guess at in their responses to you.
After FireCalc gives you a survival rate, come back with questions and there will be lots of folks ready to help.
__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
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10-19-2009, 02:59 PM
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#8
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Recycles dryer sheets
Join Date: Sep 2008
Posts: 169
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On the top level, you look to be in good shape. Congratulations!
I know that you will want to be sure that you track your expenses and that they compare favorably (lower) with your projected income. Also, using Firecalc to evaluate multiple scenerios will give you a good idea of your probablilty of success based on past market results. The link to Firecalc is posted on this site.
If you are like me, you will want to look at the possibilities a thousand different ways before taking the FIRE plunge. Firecalc is great for that and will help reduce anxiety caused by the unknown.
Cheers!
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10-19-2009, 03:00 PM
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#9
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2007
Posts: 14,328
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Right. The missing part is your expenses. Although this is not an exact science, if you haven't taken a good shot at figuring out both a "like to spend" and "must spend" budget, it is hard to know if you'll have enough.
I'd say that it looks like you are in good shape, but it all depends on your expenses.
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10-19-2009, 03:10 PM
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#10
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Moderator Emeritus
Join Date: Sep 2007
Posts: 17,774
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Yeah, I agree, depending on your expenses, you seem to be very comfortably set to retire at 59.5--if you can wait that long
__________________
“Would you like an adventure now, or would you like to have your tea first?” J.M. Barrie, Peter Pan
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10-19-2009, 05:37 PM
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#11
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Thinks s/he gets paid by the post
Join Date: Jul 2007
Posts: 2,487
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ditto, what are your expenses, now and projected for retirement? (i.e., more for travel and hobbies, less the amount you are now saving in 401ks and IRAs for retirement).
R
__________________
Find Joy in the Journey...
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10-19-2009, 09:40 PM
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#12
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Recycles dryer sheets
Join Date: Sep 2009
Posts: 353
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As others said, expenses matter a lot, but also regarding the following oversimplification...
Quote:
Originally Posted by tiuxiu
Oversimplification = (400k+500k)*(4% rule) = $36k per year so monthly $3000+$1300+$700 = $5000/month gross with paid off house and health bennies. Solid.
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I think you may want to think about :
(1) Inflation: are $1300 and $700/month adjustable with inflation? There are 2 parts here actually:
(1a) Is it going to be $1300 7 years from now? If so, it's not the same as $1300 today. Same question for $700.
(1b) Once you start receiving these amounts, are they going to be auto-adjusted with inflation going forward? It will make a big difference even with low inflation, let alone high one.
(2) Taxes: is 400k lump sum going to be taxable? If so, you are looking more like at 200-250k, depending on tax laws in 7 years, and then if we have inflation, again, 200k in 7 years is less than 200k today. For example, with 3% average inflation, 200k in 7 years ~= 160k in today's dollars. (So if you are thinking of matching expenses with your income make sure you do both in today's dollars or both in dollars in 7 years.)
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10-19-2009, 09:52 PM
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#13
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Thinks s/he gets paid by the post
Join Date: Jan 2006
Posts: 1,012
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Quote:
Originally Posted by smjsl
(2) Taxes: is 400k lump sum going to be taxable? If so, you are looking more like at 200-250k, depending on tax laws in 7 years, and then if we have inflation, again, 200k in 7 years is less than 200k today. For example, with 3% average inflation, 200k in 7 years ~= 160k in today's dollars. (So if you are thinking of matching expenses with your income make sure you do both in today's dollars or both in dollars in 7 years.)
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can you roll it to an IRA, hopefully?
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10-20-2009, 06:07 AM
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#14
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Recycles dryer sheets
Join Date: Oct 2009
Posts: 85
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Yes, both the $1300 and $700 amounts have annual COLA'S, and I can roll the 400K into an IRA.
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10-20-2009, 06:30 AM
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#15
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Recycles dryer sheets
Join Date: Sep 2008
Posts: 169
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You are starting to look Bulletproof!
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10-20-2009, 07:01 AM
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#16
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Recycles dryer sheets
Join Date: Oct 2009
Posts: 85
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I just ran Fire/Calc and it appears that If I work till I'm 59-1/2, I can withdraw $85K per year (about what I make now) and it should take me to 85 years of age.
Given the low cost of living in Arkansas, I'm tempted to pull the plug now at age 52 (at about 65K annually), however,.........5 school aged kids!!!
I suppose I'd better hang on until 59-1/2.
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10-20-2009, 08:45 AM
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#17
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2005
Location: Chicago
Posts: 13,183
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Quote:
Originally Posted by rdjrn
Given the low cost of living in Arkansas, I'm tempted to pull the plug now at age 52 (at about 65K annually), however,.........5 school aged kids!!!
I suppose I'd better hang on until 59-1/2.
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I would. I'm relatively familiar with retirement living costs in Arkansas, at least northern Arkansas, and your savings for an equivalent life style may not be as dramatic as some would lead you to believe.
Compared to northern Illinois, real estate/housing is cheaper. But cars, groceries, utilities, clothing, booze, furniture are as much or more. Taxes depend on your situation. Real estate taxes are lower but state income taxes would be higher for me.
Bottom line, other than getting a replacement house for less money, it didn't seem like there were any big time savings for me vs northern Illinois. YMMV.
__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
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10-20-2009, 09:02 AM
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#18
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Thinks s/he gets paid by the post
Join Date: Oct 2006
Posts: 4,629
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Unless management decides to drop the health plan for retirees .....
I'd look for a quote on individual health insurance for a family (with current ages +7) and add that to my potential spending.
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10-20-2009, 09:16 AM
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#19
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Recycles dryer sheets
Join Date: Oct 2009
Posts: 85
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Good point. My company seems in pretty good shape right now, but who knows what the future holds. I forgot to mention that I also have free VA medical care available if I need it.
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10-20-2009, 09:10 PM
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#20
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Thinks s/he gets paid by the post
Join Date: Mar 2007
Posts: 1,860
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Quote:
Originally Posted by rdjrn
I am 52 with plans to retire at 59-1/2. and currently have a 401K worth $500K. I also have a company pension that should be worth around 400K Lump sum when I go, plus a very good company health plan that will cover me and my family until medicare kicks in at 65. In addition I receive a monthly tax free disability check from uncle sam for $1300. And finally, I will begin receiving my Army Reserve retirement check at age 60 ($700/Month).
I am married with four kids (aged 14, 12, 9 and 8). I owe about $38,000 on my house which should be completely paid for by the time I reach age 59.
I need some expert opinions here,.....am I on track to retire at 59-1/2?
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You left out how much you spend/month today...which is a critical factor. Also, what's your housing situation? Is your home nearly paid off? How much do you save today? Too many unknowns IMO to give you a good answer, but certainly based on your balances you're ahead of most Americans. well done.
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