FIRE Scenario - How are ya feelin' now!

[Spanky]

I'm the one who picked $500K, but we're in a situation that almost doesn't exist anymore. We have a defined-benefit pension with 100% COLA (for the Wash. D.C. metro area), medical, prescription, dental and vision coverage for life for 30% of the group premium. This becomes secondary to Medicare at 65. Zero debt, no mortgage. The only possible "gotcha" that I can think of is long-term-care coverage but only 5% of people end up needing that.

Another "gotcha" is that the COLA defined pension may disappear. This is evident in the private sector in which many companies default their pension obligations. The majority of people would say that the government will never follow suit. However, the government is heavily in debt. The current payout in pensions exceeds the current government payroll. How much longer can the government continue to pay?

 

[megacorp-firee]

Another "gotcha" is that the COLA defined pension may disappear. This is evident in the private sector in which many companies default their pension obligations. The majority of people would say that the government will never follow suit. However, the government is heavily in debt. The current payout in pensions exceeds the current government payroll. How much longer can the government continue to pay?

Wow Spanky ... kinda pessimistic don't ya think? Next you'll tell me there is no Santa Claus or Easter Bunny.

 

[chinaco]

Interesting.


The sweet spot for most seems to be between $1-2 M.

 

[becca]

I voted for $2 million. We retired almost 7 years ago at ages 54 and 48 with $1.6 million. Now we are 55 and 61. We've averaged taking about 4% year from our portfolio to live on and the value of our portfolio is now $2.1 million. House is paid for, children are finished college and we are extremely lucky in that we have retiree health care from a former employer for $75 per month. We have a portfolio split between stocks and bonds 50/50. All the stocks we own are in good dividend paying companies - although a lot of these are banks which have taken a huge hit. Up until this point we have felt very comfortable with our finances and investing - but the market lately is making us a bit nervous (actually very nervous). We do have the option of my husband taking social security next year - so we might reduce the amount we take from our portfolio if the market continues it's nosedive. I will say that these past 7 years have been the happiest of my life.

 

[Martha]

With everyone focused on "the number" it seems like a good time to remember Bob Clyatt's solution. Amazing how much even a modest income stream makes a difference, using the 25x rule of thumb. Bringing in even $20k per year in ESR is like having an extra $500K saved, at least for as long as you can keep up the work.

Working on my taxes right now. I retired at the end of 2006 after two years of part time work. Part of my retirement agreement was that I would receive a portion of fees I had billed but not collected. As a result I made about $30,000 last year. This year my old work place hired me to help out with a hospital bonding project and I expect to make about the same. The work is now done and in a week or so, taking off for the south!

I feel very lucky that I have been able to have some extra money come in over the past couple of years. It makes me much more comfortable taking trips and doing other fun stuff. And buying beads for my bead projects.

I don't know if I will hunt up any more work, but it is comforting to know that I can.

 

[Alan]

We do have the option of my husband taking social security next year - so we might reduce the amount we take from our portfolio if the market continues it's nosedive. I will say that these past 7 years have been the happiest of my life.

I never get tired of hearing from folks who RE'd and have been extremely happy after doing so. I think with the option of taking SS now, that you are well set up.

 

[old woman]

I could retire with a home paid off and 500K but SS will only pay me about 1,200 a month so it would mean drawing down my nest egg maybe what medical cost plus 6K a year to get by. Married like in this would be easier since SS would be more than double and property taxes and things wouldn't be. It would be poverty but I could do it. It would be easy if I took a reverse mortgage but they cost too much so I would wait until I was over 80 to consider it.

 

[W2R]

I could retire with a home paid off and 500K but SS will only pay me about 1,200 a month so it would mean drawing down my nest egg maybe what medical cost plus 6K a year to get by. Married like in this would be easier since SS would be more than double and property taxes and things wouldn't be. It would be poverty but I could do it. It would be easy if I took a reverse mortgage but they cost too much so I would wait until I was over 80 to consider it.

An SWR of 4% of that $500K would be $20K/year, before taxes, and I suppose maybe $15K or so after taxes. That would give you $9K/year for health insurance and deductibles, which from what I have read on the board might be possible if you are in good health. But if you are not, it could be a problem until Medicare kicks in.

Living on $1700/month after taxes in a paid off house with my medical care already paid for doesn't sound like poverty to me, but then I guess we each have our own definition of poverty.