Am I ready?

[tmitchell]

54 yrs old, partnered, no kids



Why is money even a factor to you.........do whatever you want.....when you want.

Point taken! I have found reaching FI to be an ironic climb to a "freedom" I've really always had, though never adopted?? It's weird. It's like, for so long I thought it was about the money, but it really isn't. Hopefully I didn't waste a decade getting here, but guess I'll never really know.

For now I'm trying to assume the position and get out of the mindset of a worker bee. Much harder than I imagined it would be.

 

[Retired Expat]

Hoping to have my situation vetted. I'm looking at taking a sabbatical next year to test the waters but will be leaving a very good, well-paid job to do so. Some of my work is still fun, but I'm over the megacorp and being chained to all the nonsense that comes with it. I may choose to work as a consultant or take short term contracts (unless the time off is so great I end up liking it too much).

Barring a huge downturn, I anticipate the following when I give notice in Jan 2021:

54 yrs old, partnered, no kids

2.4M LNW, out of which 2.2M in 60/40 index funds, 240k cash (set aside for potential RE down payment--currently renting--or retiring into a recession)

Expenses $52k/yr (without travel, estimate $500/mo for ACA)
Additional travel budget $24k/yr, bringing total desired to $76k/yr

I'm not counting on SS but maybe that will be gravy.

If I choose never to work again is this do-able? Firecalc says yes but I worry I'm missing something.

Your sabbatical is a great idea. I had thought and budgets and found that retired living was extremely different then I planned. Albeit I did move to s new country in a different continent but I had been many times and thought I had a good handle on it

Fortunately in reality my cost of living was 35% less than I had figured

 

[steveark]

If you pay the entire cost of an ACA plan for two the cost is over $1,300 per month. If you are counting a subsidy then plan for a wealth test to be imposed to make you ineligible at some point. Even so I think you are fine. Not considering Social Security is much too conservative. At the worst consider 75% of your projected benefits as being iron clad. That adds nearly a million to your portfolio, effectively. You are in great shape. I retired at 60 and if you plan on consulting, even possibly, then set that up before you retire. I did that and have managed to make 100% of my living expenses working 8 hours a week for each of the five years we've been retired. My portfolio is larger than yours and just keeps growing because I have touched it.

 

[2cheap2eat]

Hoping to have my situation vetted. I'm looking at taking a sabbatical next year to test the waters but will be leaving a very good, well-paid job to do so. Some of my work is still fun, but I'm over the megacorp and being chained to all the nonsense that comes with it. I may choose to work as a consultant or take short term contracts (unless the time off is so great I end up liking it too much).

Barring a huge downturn, I anticipate the following when I give notice in Jan 2021:

54 yrs old, partnered, no kids

2.4M LNW, out of which 2.2M in 60/40 index funds, 240k cash (set aside for potential RE down payment--currently renting--or retiring into a recession)

Expenses $52k/yr (without travel, estimate $500/mo for ACA)
Additional travel budget $24k/yr, bringing total desired to $76k/yr

I'm not counting on SS but maybe that will be gravy.

If I choose never to work again is this do-able? Firecalc says yes but I worry I'm missing something.

What's your housing situation, paid off home? Renting?

 

[Dtail]

If you pay the entire cost of an ACA plan for two the cost is over $1,300 per month. If you are counting a subsidy then plan for a wealth test to be imposed to make you ineligible at some point. Even so I think you are fine. Not considering Social Security is much too conservative. At the worst consider 75% of your projected benefits as being iron clad. That adds nearly a million to your portfolio, effectively. You are in great shape. I retired at 60 and if you plan on consulting, even possibly, then set that up before you retire. I did that and have managed to make 100% of my living expenses working 8 hours a week for each of the five years we've been retired. My portfolio is larger than yours and just keeps growing because I have touched it.

The ACA might implode at some time, but if it stays or they lower the medicare age, I don't think they will change the subsidy process.
Even though many members of this forum use subsidies, it is not rampant overall in percentage terms and never discussed as a negative aspect of the policy.

 

[Alex The Great]

Your sabbatical is a great idea. I had thought and budgets and found that retired living was extremely different then I planned. Albeit I did move to s new country in a different continent but I had been many times and thought I had a good handle on it
Fortunately in reality my cost of living was 35% less than I had figured

Actually, it is a very good point. Retiring in other country may help to reduce expenses, especially health care premiums before 65 just in case ACA is not available anymore.
However, tax filing process can be a nightmare. As an expat, you need to report both US and local taxes, and then calculate the difference according to treaty law. Also, Internet access to US bank or brokerage accounts may be restricted for those with foreign IP.

 

[karen1972]

I still believe the biggest reason people will fail is that they don't account accurately for expenses.

Health: Just remember there is far more than premiums. Glasses, Dental Cleanings, co-pays (my honey just had some knee issues, $115 for first visit, $86/visit after for therapy, 3x a week for first 2 weeks, then 1x per week) yeh adds up super fast.

Big Ticket: I put $4k away a year based on the chart I created (similar to what HOAs do for reserves). This includes what I expect to be avg useful life, accounts for trade-ins and cost of labor. We are in a new construction townhome w/ plans to move in 15 years to another new construction so I didn't count in any items where useful life was over 15 years. Last town home we ended up replacing stove, dishwasher, microwave, washer, dryer, smoke detectors and carpeting but the rest we lucked out and left it for the new buyers. However, we bought fancier appliances this time which is pretty much guaranteed to mean they won't last.

	Useful Life	Remaining	Cost	Yearly
refrigerator	13	13 1500 $115.58
stove	15	15	750	$50.00
dishwasher	12	12	750	$62.50
microwave	8	8	500	$62.50
garbage disposal	13	13	300	$23.08
Washer	12	12	800	$66.67
Dryer	13	13	800	$61.54
Water Heater	12	12	1300	$108.33
Air Conditioner	12	12	3000	$250.00
Furnace	15	15	4000	$266.67
Lighting	10	10	1200	$120.00
Carpet	10	10	2500	$250.00
Garage Door Openers	12	12	500	$41.67
Smoke Detectors	7	7	120	$17.14
Car #1	10	7	12000	$1,200.00
Car #2	10	2	12000	$1,200.00
Yearly				$4,055.48

 

[tmitchell]

What's your housing situation, paid off home? Renting?

Currently renting in a rent controlled apartment, HCOL area. We are considering moving to a cheaper/smaller area eventually but haven't decided. Obviously I'd need to take that housing situation into account.

Seems like a lot of people here RE and never budge from their forever home, but I don't want to stay in a big city forever.

 

[npage]

I'm closing in on your numbers but am 46. Similar spending as well. I too despise megacorp daily, trying to hang on as well. In anticipation of pulling the plug any day I have ended up with way to low a stock allocation. About 40% stock only but it is all in my 401k.

My thinking was effectively deplete the taxable account for now and let the 401k grow till age 59. Taxable is all cash right now but sometimes in muni bond fund.

That said I need more stock but so hard to buy more in this environment in my head.

 

[tmitchell]

I'm closing in on your numbers but am 46. Similar spending as well. I too despise megacorp daily, trying to hang on as well. In anticipation of pulling the plug any day I have ended up with way to low a stock allocation. About 40% stock only but it is all in my 401k.

My thinking was effectively deplete the taxable account for now and let the 401k grow till age 59. Taxable is all cash right now but sometimes in muni bond fund.

That said I need more stock but so hard to buy more in this environment in my head.

Good for you for closing in!

There are tax strategies that favor keeping bonds in your tax-sheltered accounts, fyi. You might want to look into that. Regardless 40% is pretty low. Have you input that in Firecalc to see what the results are like?

 

[npage]

Good for you for closing in!

There are tax strategies that favor keeping bonds in your tax-sheltered accounts, fyi. You might want to look into that. Regardless 40% is pretty low. Have you input that in Firecalc to see what the results are like?

Yeah, I have had high earnings so have been using tax exempt muni fund in taxable account. I admit it has been more of a I don't want to see the money that makes me feel comfortable in near term to quit to go down but probably has some flaws in my thinking. I generally target a 50/50 allocation. Just so happens the 50% stock is all in my 401K. As I get closer to 59.5 I will adjust that.

FIRECALC is pretty close for me. In current situation we can stay under 4% withdrawal. At a young age, pre-exisiting conditions for me and wife and ACA constantly under attack I have no clue how to be 100% confident there. I really feel most nervous about that part. The whole thing has a lot of assumptions but that one to me is the riskiest for anyone under 65 and planning to retire.

I also am hoping for a San Diego real estate correction as I would love to live there (Firecalc does not work and requires another 4 years give or take of work which I don't know if I can stomach).

 

[armor99]

Why wait till January?
You're totally set

Rule of 55. So close now, no point in paying feesyou don’t have to.