Critique my plan, please

[Hyper]

- 47 yrs old, was let go at 45 and don't wan't to go back to work full time.
- 0-debt, 600k+, 300k+ in 401k, 300k+ in real estate we plan on selling soon and wife should have a pension somewhere around 100k.
- Use the 600k & 300k (realestate sold)= conservatively invested and live off of until 67yrs old
- At 67 ss for the wife and I = 42k yr and 300k+ (401k) and the wife's pension should be around another 100k to get us to the end

We are currently living off DW 30k bring home and about 2k out of savings a yr but would be a bit happier if we bumped the out of savings use up to about 5k a yr.
Wife will have to work longer to get the ss for taking off a few yrs but likes to work and I don't see her quitting working.
I started a small business (no profit yet) and really wouldn't mind it if I worked a few months out of the yr at a job I LIKED. I'm pretty much doing the things I enjoy now off the income we have now so don't see an increase in my spending.

Seems comfortable to me unless I am missing something. What am I missing short of armegedon or the politicians means testing and taking away ss ?

Hyper

 

[EastWest Gal]

Hard to critique due to some unclear items.

Wife's pension = 100K. Does that mean 100K/year or what exactly? That is an amazing pension.

Be careful about SS assumptions--the website bases your estimated SS on continued work. They take a 35 year annual look at your income to determine SS, so you will get less SS than you think.

Have you analyzed your expenses? What about health insurance? Depending on your wife's actual pension, you could be OK, but it sounds a little tight. A $100K per year is a heck of a pension, but the way you described it, I'm not sure I understand it correctly.

There are much better financial analysts on this board who will weigh in, but my feeling about this is that it could be tighter than you realize. You could be trying to live another 40 years without income. That is a lot of years.

 

[Hyper]

Oh no not 100k yr. I am guesstimating as I don't completely understand how hers will work yet. She's not been there very long yet. We're actually inquiring about it now. My ss should be fairly close as I had barely any income last yr and it still gave me that amount. I will still be hit with a couple 0$ yrs though in the average. Hers, she is working longer to get her yrs in.

We have no debt. We live on 32k yr now. After we sell our additional prop (300K+) added to 600k current = 900K we hope to invest CONSERVATIVELY and start using

At 67, ss and 300k+ in 401k and what ever her pension works out to be.

Majority of my fam barely makes it past 60's. Her fam barely makes it past 70's. We're both in very good healthy and active. Those are the types that go first. Hope I'm wrong about that though.

 

[pb4uski]

Check out FAQ on this site on questions to ask before retiring. Run your situation/numbers through Firecalc or Quicken Lifetime Planner or some similar retirement planning tool.

 

[MooreBonds]

- 47 yrs old, was let go at 45 and don't wan't to go back to work full time.
- 0-debt, 600k+, 300k+ in 401k, 300k+ in real estate we plan on selling soon and wife should have a pension somewhere around 100k.
- Use the 600k & 300k (realestate sold)= conservatively invested and live off of until 67yrs old
- At 67 ss for the wife and I = 42k yr and 300k+ (401k) and the wife's pension should be around another 100k to get us to the end

As the other poster pointed out, make sure you run SS estimates using your exact SS earnings record. You don't want to plan for something like this only to have it suddenly change because of some assumption or glitch in the program's computations (also, SS estimates take a year, sometimes two, to input your earnings record).

Also, it can be confusing sometimes working with future income streams to keep everything in constant dollars. That $42k/year in SS at age 67 is 20 years from now. With just 3% average inflation, that $42k/year in 2034 is only worth about $24K/year today! So when estimating budgets and income, make sure everything is either in today's dollars, or everything is in the same future dollars.

 

[rodi]

So your spending is 35k/year. (30k wifes income + 5k savings)
Is that 30k net or gross? If it's net - add to your spending to account for taxes.

Does your wife get health benefits? When she stops working you'll need to account for that increase, if you're both pre65 (medicare age).

You've got a nice nest egg - now you need to plug in your spending and investable assets figure into firecalc to see how it plays out. Don't forget to look at all the tabs - the second tab allows you to input SS and pension income streams. Make sure to pay attention to the inflation adjusted check box on the pension streams and check it appropriately. (Depending on whether your wife's pension is COLAd or not.)

Make sure to input your asset allocation on the approprate tab as well. If you're all cash - that will have a huge impact.

I 2nd pb4uski's recommendation to run it through quicken's lifetime planner if you have quicken. You might want to check out fidelity's RIP calculator as well. But I'm the type of person who ran my plan through absolutely every calculator I could find in order to garner the most information and to find any holes in my plan.

 

[Amethyst]

When factoring pensions into planning, keep in mind that pension income is typically (though not in all cases) taxed as ordinary income. In my case, the pension is slimmed a good 40% by Federal, State, and local taxes

A few states don't tax pension income, or tax it less than ordinary income.

Amethyst

 

[Hyper]

Thank you. A lot of good info and direction I had not thought about. Yep 30k is actual take home after taxes, ins and ret have all been taken out. She does have decent ins. Without it, I'm estimating about 10k a yr for premiums and out of pocket cost. That 32k is actual cost for us to live a yr, but 35k would be more comfortable. I could live happily on a little less but less kinda starts making DW a bit grumpy so I give a little to make her happy.

 

[MikeWillRetire]

When factoring pensions into planning, keep in mind that pension income is typically (though not in all cases) taxed as ordinary income. In my case, the pension is slimmed a good 40% by Federal, State, and local taxes


Amethyst

40%? That is high!

 

[jebmke]

Need to include income taxes in spending projections.

 

[Amethyst]

Indeed. That is the main reason we are considering moving out of state.

Amethyst

40%? That is high!

 

[Live And Learn]

Hi and welcome. My budget includes $6k for food, $7k for home maintenance (including setting aside money each year for big one time type things likes a new roof, HVAC replacement, etc), 25k for healthcare (premiums plus out of pocket max) and 6k for taxes. That alone is higher than your total annual spend. I'm curious on the breakdown of your 30k budget. Could you provide a split by expense - maybe I can learn ways to reduce my budget !

 

[Taxman59]

I 2nd pb4uski's recommendation to run it through quicken's lifetime planner if you have quicken. You might want to check out fidelity's RIP calculator as well. But I'm the type of person who ran my plan through absolutely every calculator I could find in order to garner the most information and to find any holes in my plan.

I too ran the numbers using 4 or 5 different calculators and noticed each one pointed out a "flaw" in my thinking. I then fixed the problems and now all of the calculators show a very high probability of success. Every programmer has certain assumptions that may or may not apply to your situation. By looking at many different calculators, you will get the advantage of all of them an won't make a mistake (at least without being warned!).


Sent from my iPad using Early Retirement Forum

 

[Hyper]

Live and Learn, I can but you probably won't believe me. We've built our last four homes COMPLETELY while working 12-16 hrs day at real jobs, with a cpl fixer uppers thrown in there, so have not had a mort$ pmt for quite some time. 2/3 of a home is labor. We do all maintenance on everything. If I don't know something, I research it until I do (investing kicks my butt). We are on our fourth new home now which is why we will have real estate to sell in the near future. New home= no surprises on maintenance. With building them ourselves, the are extreme efficient. Electric bill prob averages $45, mth and we live in north with REALLY bad winters 6 mths of the yr. Insurance is taken out before the 30K, but have a 3k out of pocket and we keep all other insur clean of crap they try to stick you with regardless of amt. food, can't say as you would not want to eat my cooking. We drive all our vehicles to 200k and do all maintenance. We have always tried to never borrow. Weird thing is, we have been really criticized by our peers but we could always do what we wanted and usually more than them but didn't buy just to buy. guessing on taxes 3-4k. We are quite happy and know we could go buy it if we need it, just don't unless we need to. We aren't doing without at all but could jump the 2k up to 5k and relax a little more. I do like to go and our vehicle gas bill rivals a mortgage pmt a mth. I could give up a lot not to have to go back to working for someone. I don't mind working just never worked for a good company before so work was always super stressful. Just want to make sure I'm not missing anything but need to run through all the programs to make sure we will be ok.

 

[Hyper]

I've run the FIRE calc and Fidelity RIP. Both came out much better than I had hoped. I ran many senarios. I jumped up the amount wanted to withdraw and extended the yrs which we think we will live.

I get the impression some don't fully count on what SS says they will be getting. Should I not rely on the amount SS says I will be getting on their site?

Thank you

 

[Jaded salami]

I've run the FIRE calc and Fidelity RIP. Both came out much better than I had hoped. I ran many senarios. I jumped up the amount wanted to withdraw and extended the yrs which we think we will live.

I get the impression some don't fully count on what SS says they will be getting. Should I not rely on the amount SS says I will be getting on their site? be

Thank you

As a previous poster said, you can get a better estimate than what SS says (their number is based on if you work until 65), by putting in zeros for the years between now and 65. You will get a smaller number (by how much depends on your earnings record).

The latest estimate is that SS will only be able to pay around 70% of benefits around 2033 unless the law changes between now and then. For now, I'm using that haircut in my benefit estimation.

 

[Hyper]

I'm not quite understanding. I have 31 yrs now of earnings on SS so will have 4 zeros. I had next to nothing for income in 2013 and SS is up to date on counting that as they based what I would receive based on that amount I made in 2013 until I reach retirement age. How else can I calculate that amount? I'm a bit confused.

Good point about the 70%. I did read that also and will run that amount to see how it comes out.

Thank you

 

[Jaded salami]

You need to go to www.socialsecurity.gov and click on ''estimate retirement benefits'
their will be an option there to put in your earnings by year (I know it's a pain). This will give you a more accurate number than what SS gives you in their yearly mailing.

 

[Hyper]

Good grief, I'm sloowww! So I did just that and the benefit was higher than what they have estimated by about $50 bucks.

Thank you

 

[Sunset]

Personally, I'd be too nervous to retire at 45 with only 900K + 300K in 401K and a paid off house.
Hopefully you did the SS calculation where you plug in each year's earning and zero's for the rest of them.
Since you have not been working for the past 2 years, why are your vehicle gas bills so high, seems to me you don't have to drive much now, you wife does of course.

 

[Hyper]

I've checked SS everyway I can possibly try. Even cut both mine and wife's back to 70% as was suggested. Bumped up withdrawal 30% higher than what I think it will be on every calculator I could find (some are strange), dropped return rates to 2-3% and extended life expectancy out another 10yrs longer than what anyone in mine or the wife's family. We passed on every calculator scenario. New home, hopefully no surprises and if we do, we do everything ourselves, completely. I'm working now to get invested hopefully correctly. It doesn't take much to make me happy. Could care less about what I drive or what others think of us. Always been the odd ones. Wife's drive is about 8 min. Gas bill is high because we take off and just go. Doesn't bother us to do this. Vehicles are not the best mpg.
I got a text this morning that a co-worker had passed yesterday, early 50's, other co worker that had HA at 50. BF passed years ago at 41. Surprisingly, I'm not having second thoughts at all. I'm not sure what else I can possibly do and we have actual COL since I haven't worked in a yr-1/2.