Turning 50 in a month, I know what you are going to say..

[StuckinCT]

Turning 50 in a month

Okay so the big 5-0 is just over 30 days away, and here is where things stand:

Primary Home- $1.49mm $565k mortgage
Second Home- $717.5k Paid
Taxable Portfolio- $7.2mm
IRA- $1.35mm
Roth-$150k
SS $42k me at 70 stopping now, wife will get $21k
No pension
No other debt

Total Spend including Taxes Health insurance is $300k
DW makes $25k part time job she likes and ten years younger
Three kids 11,10,9 have $1.75mm set aside in 529s /other accounts for Ed
Will downsize house at age 62 for $1mm home, reduce spend some as kids leave?

Firecalc just barely 100% spending $290k- assuming DW contributes $10k

I have to work until March of next year for final payment of business sale, which is factored in above, So drum roll, can I retire? Firecalc saying 3.5% WR is 100% living to 87 not including downsizing etc.??

** We assume $25k for misc expenses each year like new furniture, painting, replacing boilers AC Roof etc..

I still feel uncomfortable- I could cut CC club which is $25k or work part time as well.

 

[njhowie]

Having $10mm with no debt other than the $565k mortgage you're being silly even asking.

Do you actually intend on spending $290k/year or did you just bump expenses as high as you could to see the minimum where Firecalc would be at 100%?

Update:
Reading again, I see:
"Total Spend including Taxes Health insurance is $300k"

What kind of expenses do you have that come to $25k/month?

I personally don't think that's a place I'd want to be in retirement.

 

[HarveyS]

Happy Birthday!
Finances look solid for joining the RE ranks as you outlined. I suggest you consider the following and re-run the numbers:
SS may be less than you plan if you stop contributing at 50 - but that won't derail your retirement.
Spend will go up as kids become teens.
If you have not already, take a good look at your family spend over the last 5 years. The last 12 months was an anomaly so don't make your next 40 years plan based on those numbers.
Have you accounted for tax on the final business payment?
Do you have adequate life insurance?
You have two large homes. $25k/yr for maintenance seems light from my experience.

 

[tb001]

We’re very similar from a finances/kids/spend place. Have you accounted for the mortgage as a separate spend item in firecalc, so that it’s not subject to inflation? That may make a difference in your success rates. We’re at 100% to 95 when we do that.

Fwiw, when I realized that stagflation were the cycles that put us most at risk, it was psychologically helpful, as we have levers we can pull in that scenario.

 

[StuckinCT]

Happy Birthday!
Finances look solid for joining the RE ranks as you outlined. I suggest you consider the following and re-run the numbers:
SS may be less than you plan if you stop contributing at 50 - but that won't derail your retirement.
Spend will go up as kids become teens.
If you have not already, take a good look at your family spend over the last 5 years. The last 12 months was an anomaly so don't make your next 40 years plan based on those numbers.
Have you accounted for tax on the final business payment?
Do you have adequate life insurance?
You have two large homes. $25k/yr for maintenance seems light from my experience.

Thanks Harvey!

Re SS- I have 23 years of max earnings, and I projected a small earned income starting next year to get to 42k- my benefit statement is higher.

Re the homes they are both newer and I actually went through replacing basically everything including $12k sub zero and roof on primary, driveways etc and it adds up to $250k over the next 10 years. The second home has almost a new 30 year roof, new water heater, Buderus boiler and one zone, but the generator will go and so will the condenser. We have three condensers on our primary which will go and I have a quote on complete reinstall of $24k. Painting primary this year so one more paint before sell. Maintenance does not include landscaping- but I am glad you point this out!

Last 12 months we spent a ton of money on kitchens furniture painting etc so I expect spend to come in at the $300k.

 

[StuckinCT]

Having $10mm with no debt other than the $565k mortgage you're being silly even asking.

Do you actually intend on spending $290k/year or did you just bump expenses as high as you could to see the minimum where Firecalc would be at 100%?

Update:
Reading again, I see:
"Total Spend including Taxes Health insurance is $300k"

What kind of expenses do you have that come to $25k/month?

I personally don't think that's a place I'd want to be in retirement.

Real estate taxes 3k a month, health insurance 2.5k a month, maintenance 2k a month, taxes 3k a month, CC club 2k a month leaves $12k to run a household with three kids and two large homes.

I don't think I am being silly, I actually feel a lot of angst about this as I might have to find a new job next year. Northeast taxes and HCOL is at work here, and my family lives here, maybe I can get to FL when I am 62 but until then I think I may have to work in some capacity as Harvey points out, kids are expensive!

 

[FANOFJESUS]

I think you will be fine but I still cut out the CC club.

 

[njhowie]

Real estate taxes 3k a month, health insurance 2.5k a month, maintenance 2k a month, taxes 3k a month, CC club 2k a month leaves $12k to run a household with three kids and two large homes.

I don't think I am being silly, I actually feel a lot of angst about this as I might have to find a new job next year. Northeast taxes and HCOL is at work here, and my family lives here, maybe I can get to FL when I am 62 but until then I think I may have to work in some capacity as Harvey points out, kids are expensive!

The silly comment was before seeing you do actually intend to spend $300k/year.

I would not feel comfortable at all in this situation - the expenses are way too high. You need to downsize and get better control over your expenses - I'd agree with ditching the country club to save $25k/year...is it really worth $500/week? Minimally sell one of the homes before leaving the job. It should not take $10k/month to run a household, even with three kids and a nice house.

Just my views.

Good luck whatever you decide.

 

[tb001]

I think you will be fine but I still cut out the CC club.

I look at that as affordable but easy to trim if it’s necessary. It’s a high annual cost, but if you use it, not that different from many travel budgets I’ve seen here.

 

[tb001]

The silly comment was before seeing you do actually intend to spend $300k/year.

I would not feel comfortable at all in this situation - the expenses are way too high. You need to downsize and get better control over your expenses - I'd agree with ditching the country club to save $25k/year...is it really worth $500/week? Minimally sell one of the homes before leaving the job. It should not take $10k/month to run a household, even with three kids and a nice house.

Just my views.

Good luck whatever you decide.

At what financial level would you consider it not silly/those expenses to be reasonable? 100% is 100%, regardless of your spend. Or should people plan on being at 150% in your view? I would argue that someone at this asset level is much safer because there is so much that CAN be cut if necessary.

 

[pacergal]

OP--you certainly have saved well and provided for your family, congratulations!
I would encourage you to really drill down on your expenditures and know as your kids hit the teens, expenses may be likely to go up--spots, dances, etc.
This may be a time to seriously look at "Needs vs Wants"
Do you need two houses, Do you need the country club, etc.
Could you sell one house to improve your situation where you feel comfortable retiring now?
Is there a possibility of moving to a lower COL area? Your kids are still pretty young and will adapt, if you and your wife are enthusiastic and happy with your decision.
If everything you list is a definite Need to you, then you may have to continue to work if you are uncomfortable with your Firecalc results.
Best Wishes to you, you really have done well.

 

[Franklin]

Stuckin CT, you have enough assets to do just about whatever you like. My spend is very close to yours and Ive learned to re-evaluate annually and make adjustments as needed. You can afford the CC and the schools and if the crap ever hits the fan you can cut back as needed. You have been on this site long enough to know you have allot of flexibility. My first FIRE was at 50 with only half your stash and I got hammered in the 08 recession. I went back to work again to right the ship and doubled the nest egg. Thats what we do if life throws you some lemons. But please rest easy that you have the $'s and the knowledge to weather the storms. You and I have spoken before and you're advise to me was to not let others throw shame at your spending. The advice
is back to you. Now go and enjoy that big 50! You earned it.

 

[Ramen]

OP, it sounds like your discomfort and angst might be about more than money. Your screen name ("Stuck in CT") and some of your statements suggest that you do not feel free. ER is about freedom and doing what one wants or feels called to do. Family commitments are serious and must be attended to (raising kids, etc.), but what about you and your needs, mental and physical? Why do you feel stuck? What would it take to feel unstuck? Not proposing any answers here. Just asking some questions that I would have of myself if I were in your situation.

 

[TheWizard]

I would not include Income Taxes in your $300k total spend.
Your retirement income from your taxable account will likely be taxed way less than your current employment income...

 

[pjigar]

I have been planning FIRE at 50 for a while and I have never felt comfortable with WR more that 3%. Just my 2 cents. RE at 50 has a long road ahead and hence I feel the need to be little more conservative.

 

[daylatedollarshort]

Your lifestyle expenses have seemed to cause you to be a financial prisoner of your own making. You could move to the south of France tomorrow if you wanted and never have to work again.

You might want to read some books or watch videos on happiness studies and also the benefits of simplifying and minimalism. What good is all that savings if you aren't using it to buy happiness and peace of mind? Also check out the studies linking materialism to depression and anxiety.

 

[l8_apex]

OP: why are you stuck in CT? If you were to move to any moderate or low-cost-of-living location, there would be zero chance of running out of money were you to retire now.

Locations with good schools can be found. Kids can adjust to moves, I would even argue that it would be good for them to do so once.

Congrats on your success, you're in the driver's seat here.

 

[tb001]

Daylatedollarshort brings up a good point. Since I pulled the plug a year ago, I’ve been amazed at how much our costs have gone down. Some due to COVID of course, but also just having time to optimize expenses has made a decent dent in our spend.

If your wife has already been working part time, she may have already been on top of these kinds of things, but we were able to easily cut ~5% of spend just doing easy stuff that has had minimal impact on our lifestyle.

 

[tb001]

I have been planning FIRE at 50 for a while and I have never felt comfortable with WR more that 3%. Just my 2 cents. RE at 50 has a long road ahead and hence I feel the need to be little more conservative.

With the market run up, we’re a bit above that, but close. For peace of mind, I agree this is a good target. I’ll admit, I’ll feel better if/when we’re under 3%.

 

[KingOfTheCheapos]

Well done. A few points.

a) $1.7M for education is a hell of a lot. That's $600K per kid even full payment at an Ivy League is going to set you back $400K for a 4 year degree at most.

b) Will your tax bracket be higher now or when you retire? If the former, then you need to invest more pre-tax dollars.

c) Remove SS from any calculations to be safe.

d) What is your AA for the $7.2M

Okay so the big 5-0 is just over 30 days away, and here is where things stand:

Primary Home- $1.49mm $565k mortgage
Second Home- $717.5k Paid
Taxable Portfolio- $7.2mm
IRA- $1.35mm
Roth-$150k
SS $42k me at 70 stopping now, wife will get $21k
No pension
No other debt

Total Spend including Taxes Health insurance is $300k
DW makes $25k part time job she likes and ten years younger
Three kids 11,10,9 have $1.75mm set aside in 529s /other accounts for Ed
Will downsize house at age 62 for $1mm home, reduce spend some as kids leave?

Firecalc just barely 100% spending $290k- assuming DW contributes $10k

I have to work until March of next year for final payment of business sale, which is factored in above, So drum roll, can I retire? Firecalc saying 3.5% WR is 100% living to 87 not including downsizing etc.??

** We assume $25k for misc expenses each year like new furniture, painting, replacing boilers AC Roof etc..

I still feel uncomfortable- I could cut CC club which is $25k or work part time as well.

 

[daylatedollarshort]

OP: why are you stuck in CT? If you were to move to any moderate or low-cost-of-living location, there would be zero chance of running out of money were you to retire now.

Locations with good schools can be found. Kids can adjust to moves, I would even argue that it would be good for them to do so once.

Congrats on your success, you're in the driver's seat here.

Another benefit of moving to a lower cost area (and dropping the country club) would be that people tend to compare themselves to their peers. For many, maybe most people, it is harder to feel satisfied when surrounded by relatively wealthier people, even if one is relatively wealth compared to 99% of the country.

"If income effects are entirely relative.....Rather than promoting overall happiness, continued income growth could promote an ongoing consumption race where individuals consume more and more just to maintain a constant level of happiness."

Money Can Buy You Happiness But Only Relative to Your Peer's Income - https://www.eurekalert.org/pub_releases/2005-08/asa-mcb080805.php

 

[Dtail]

Well would you consider moving to a lower COL area before 62 years old?
We cut our expenses way down (60%) in the last few years before retirement and while not at 300k, we were above 200k.
Tough call.....

 

[bloom2708]

What would a 50-60% market drop do to your numbers?

You can't plan for all unknowns.

Using 3%, that is $300k per year. But, if your portfolio temporarily drops to $6 million, the numbers don't work as well.

Spending less always works. Mostly it is "what would you do to make it work?" Could the $2k/month country club go or sell the second home?

I think you will be fine, but be able to zig when the markets are zagging.

 

[daylatedollarshort]

Well would you consider moving to a lower COL area before 62 years old?
We cut our expenses way down (60%) in the last few years before retirement and while not at 300k, we were above 200k.
Tough call.....

Same here, though we didn't end up moving. With lower income taxes, not paying into Medicare, no more small business expenses, no more saving for retirement, no more commute costs, eventually the kids got jobs and became self supporting and optimizing all the remaining expenses, life is a lot cheaper for the same basic lifestyle, minus the working for a living part.

 

[Dtail]

Same here, though we didn't end up moving. With lower income taxes, not paying into Medicare, no more small business expenses, no more saving for retirement, no more commute costs, eventually the kids got jobs and became self supporting and optimizing all the remaining expenses, life is a lot cheaper for the same basic lifestyle, minus the working for a living part.

Plus I am always impressed with your creativity with finding lower costing but high level entertainment.
For us, there were some changes in lifestyle, but one silly example was that we never cooked and were spending 36k yearly on food.
Nevertheless our retirement lifestyle works currently.