Please Poke Holes Through This

[Oz investor]

i would increase your allowance for inflation and health-care costs ( always better to come in below budget , in my opinion )

an income producing hobby for you AND DW ( either separate or a combined hobby) looks good if you can manage it ( that hobby could involve your stock holding just be very careful if you decide to trade chasing a steady income from it )

could you design an algo that would flag cheap periods in stocks you are interested in for example ( not every stock in the market place )

cheers , good luck and good health

[COcheesehead]

If you are a FIDO customer or at least a registered user, use their RPM planner. It lets you build a budget and has all the categories, some which might get overlooked like eye exams, dental, home repairs, medigap, gifts, etc fill it out and run it and see how prepared you are.

[Dtail]

Quote:

Originally Posted by COcheesehead If you are a FIDO customer or at least a registered user, use their RPM planner. It lets you build a budget and has all the categories, some which might get overlooked like eye exams, dental, home repairs, medigap, gifts, etc fill it out and run it and see how prepared you are.

+1
This Fido program is an excellent compliment to the Firecalc program, as it allows more examples of granularity calculated in a Monte Carlo simulator vs. a historical basis, plus it will most likely provide a more conservative result.

[Vincenzo Corleone]

Quote:

Originally Posted by athena53 How iron-clad is your wife's retiree health insurance? If it's union she may be OK. My brother, who was in management, ERd in his late 50s with retiree health insurance and a decent pension. The company dropped the retiree health insurance as of 1/1/18- just dropped it. No compensation, no option of paying some part of it. Brother and SIL are paying $22K/year (combined) for an ACA plan with a high deductible. Fortunately they live very frugally and have saved a lot, but it was a huge shock. Something you need to consider if you think it's possible.

DW works for a city government agency. It's hard for me to determine how iron-clad her retiree health insurance is, or her pension for that matter. However, given that our NW is approx 40 times current fixed/discretionary expenses[1][2], and 70 times not-quite-bare-bones expenses[2], I think (hope) there's enough cushion to cut back if need be. Am I being too optimistic?

[1] I think my OP was incorrect in stating NW was 75 times annual expenses as I was mistreating dividends; dividend income is no longer being considered in offsetting expenses
[2] Before taxes and not including my DW's anticipated pension

Quote:

Originally Posted by Oz investor ...an income producing hobby for you AND DW (either separate or a combined hobby) looks good if you can manage it (that hobby could involve your stock holding just be very careful if you decide to trade chasing a steady income from it) could you design an algo that would flag cheap periods in stocks you are interested in for example (not every stock in the market place) cheers, good luck and good health

I can't see my hobbies as ever being income-producing. I love playing guitar but my desire to play far exceeds my ability. I had been managing a portion of DWs and my portfolio which was invested in individual dividend-paying stocks. I had a subset of stocks that I kept my eye on and would selectively reinvest dividends into those that I thought were being unfairly punished or were otherwise just undervalued. But I think I wised up in thinking that dividends are some magical thing that I was benefiting from and that other, non-dividend investors were missing out on. I stopped actively managing the individual stocks and am starting to slowly liquidate them (as tax-efficiently as possible) and moving the money into index funds.

Maybe I need new hobbies. Thanks for your response. Cheers and good luck and health to you as well.

Quote:

Originally Posted by COcheesehead If you are a FIDO customer or at least a registered user, use their RPM planner. It lets you build a budget and has all the categories, some which might get overlooked like eye exams, dental, home repairs, medigap, gifts, etc fill it out and run it and see how prepared you are.

Quote:

Originally Posted by Dtail +1 This Fido program is an excellent compliment to the Firecalc program, as it allows more examples of granularity calculated in a Monte Carlo simulator vs. a historical basis, plus it will most likely provide a more conservative result.

Thanks. I'll check it out.

[Vincenzo Corleone]

Today my wife said to me (paraphrasing), "At some point we might have to dip into our investments because my salary doesn't look like it'll cover all of our expenses this year". She said this while paying bills in a very casual, non-panicy way - just as an FYI.

Although I'm glad to be sorta-retired ("sorta" because I didn't finalize the decision, but I'm no longer hustling to find work), and although our finances are OK, and although DW is completely OK with me not working, that statement she made reinforced the reality of retirement. Kinda scary, even though we would only need to harvest somewhere between 0.6% and 0.8% of our stash to make up for the shortfall. How am I going to feel when we're both retired and we're harvesting 3%?

On another note - we decided that we should see a fee-only financial adviser (and make out wills).

[Vincenzo Corleone]

Almost a year since I made my OP. Since then, our NW increased by about $275k despite my lack of W2 income, and DWs expected pension went up to a little over $20k. Also since then, I've been considering other withdrawal methods. In the past, I was only considering the Trinity study type of withdrawal strategy. Now I'm seriously considering % of remaining portfolio (thanks Audrey), and maybe VPW. If using % of remaining portfolio, using 4%:

$3.49M *.04 + pension = ~$160k/yr

And considering our asset allocation of 70 equities/30 fixed income, if the market tanked by 80% tomorrow, we'd still be able to maintain our current lifestyle (that's assuming our fixed income investments would not also go down):

$1.54M * .04 + pension = ~$82k/yr.

4% of our current portfolio would give us about 63% of discretionary spending - plenty of cushion, I think. Plus, I think I built in a little more cushion because I'm calculating taxes on the entire amount even though some of the withdrawal will be principal.

And yet I still can't seem to give myself permission to feel confident. I'm not sure what it'll take.

I'm typing this in the middle of the night (can't sleep). Sorry if this post is not the most coherent.