ER plan for a 50 yo couple

[JackJester]

Hello. I’ve been visiting this site for the past 3 years learning from all you smart folks and planning for our day of freedom. I would appreciate a sanity check on my plan:

- I’m 50, DW is 54.
- House mortgage is $130K remaining and will be paid off in 5 years.
- No other debt, but I expect I’ll need a new truck (~$30K) in the next few years due to age.
- 401K = $1,040,000
- Taxable account (Schwab) = $30K
- Cash = $25K
- Pension Lump Sum = $280K after taxes (available in 5 years at age 55). I don’t feel comfortable taking the monthly pension (I want the sure thing), but it would be $10K per year after taxes.
- Living Expenses = $75K per year (which includes an assumed tax rate of 15%, which I think we will drop into when we retire).
- Health Care (from now until Medicare) = $13K per year to cover both of us on DWs plan (mine is slightly cheaper).
- Health Care (after Medicare kicks in) = $8K per year to cover both of us (using AARPs $240K lifetime estimate). This is the big unknown.
- Estimated years in retirement = 42.
- SS combined = $42K per year taking it early at age 62.
- I’m a moderate/aggressive investor using a portfolio from portfoliocharts.com that is a blend of Merriman Ultimate/Golden Butterfly/Swensen. SWR is estimated to be 5% but I am using the traditional 4% for my planning.
- no estate to leave behind to anyone, so we can bleed it dry.

FIRECALC says 100% success, and 88% success if there is a 20% Bear market the day after we retire. But, I’m afraid I may be missing something. I plan to work until 55 and increase the 401K to $1.25mil, but work may be drying up and I could be forced out before then. I will have a hard time finding a new job due to my job specialty and our desire to remain in the Great Pacific NW (yes, cost of living is high but worth it). DW's job is stable as long as she wants, but ideally we'd punch out together. So, the next 5 years are a concern. I might have to SEPP72t to get to 59.5, or refinance, or take the 10% penalty, or other undesirable contingencies.

What do you think? If I lost my job today and we both RE, will we make it? If not, how bad is it? I know FIRECALC can help with these questions, but any feedback is greatly appreciated.

Thank You

Jack

[Blue Collar Guy]

Will you make it? Sir, my wife's uncle and all his cronies, are just about dead broke. these are the chain smokin ,story tellin, food stamp, and medicaid crowd. They are making it. You are in very good shape. Firecalc says 100 % success, they already figured in all the 20 % drops we had. Id be more worried about this 42 year time line u have. Thats more unrealistic then you going broke.

[brucethebroker]

JJ,
welcome.

As long as we are looking at worst case scenarios, why not consider the upside of finding a PT or lesser paying job to help bridge the gap to your age 55 (pension pay out). Even $1000 a month makes a big difference compared to 0$ for 5 years.

This way, you can relax a little. In my situation, employment dropped drastically in mid-50's-but it still trickled in. And by hustling a little, I was able to get by until age 62 and early SS. We made some changes to the "big plan" and it worked out.

Lots of lifestyle changes available IF YOU HAVE TO. Downsizing or moving to lower cost of living area, dropping a vehicle, cutting expenses (cable TV, eating out, golf), IF YOU HAVE TO. Remember, it would only be for a few years.

Good luck with your plan.

[DrRoy]

See what your results would be if future returns are lower and you have to go with a WR of 3%.

[mrfeh]

I didn't run your numbers for you, but on the surface, it looks iffy.

4% withdrawal rate is for 30 years, not 42.

[Enuff2Eat]

if you still like working then continue as long as you can. I think $1.5 mil plus in retirement is already put you in the top tier...

FIRECALC says 100% success... You are good to go. I think most are over worry but expecting 42 years retirement is over assume too. :-)

[Koolau]

Almost no matter the situation, my suggestion is always to have back-ups (to your back-ups, heh, heh). Yes, it looks like you are good to go. But if something would happen to go wrong, it's always good to have a back-up or fall-back position (maybe move to a lower COL area or at least be willing to trade to a lower cost house, etc.). Being flexible (and on the same page with your spouse) will get you through almost any situation. Good luck and YMMV.

[LastOfTheBoomers]

I'd revisit the pension lump sum decision again - for such a long retirement having guaranteed income makes a difference. Also run the numbers on taking it later - and levels of survivorship.

[ponyboy]

Just glancing over your numbers I would say keep working. You dont have that much saved.

Where is the money coming from? Your pension isnt available for 5 more years. You only have $25k in savings...and $30k in taxable. Thats only $55k to last 5 years?

Sure once you make it to 59.5 you can tap the 401k. Unless you can do the 72t thing. Health care is going to crush you.

You may want to work for a while.

[JackJester]

Thanks for the feedback. This is what I suspected. I need to ride it out for 5 more years (1669 days to be exact). I do have an early medical retirement plan from work that gets me from 55 to 65, but yes, covering health care from 50 to 55 will be a challenge. My wife can always work if need be (while I'm a house husband), but where's the fun in that. Save, Invest, Learn ...the march continues.