Would you retire @ 90% probability of success?

[corn18]

Hearing rumors that a RIF might be coming. Talked to my big boss and confirmed. Also discussed packages and being part of the RIF. With a minimum severance of 12 weeks, I can retire with a 90% probability of success (Ps). Most likely severance would be 26 weeks, but who knows for sure. Ps would be 95% with the larger package. Will be 55. Annual budget is $145k all in with $33k of that being purely discretionary blow that dough type spending.

Would you retire @ 90% Ps?

 

[dtbach]

Yeah, I think you are OK. Maybe take a part time job as they come available if suits you. Otherwise it seems you have plenty of slack to weather slim times.

 

[RunningBum]

I wouldn't, not in these economic times. But maybe you don't have much of a choice. If things do get rough you could trim or fully remove that $33K from your spending, or find another job. I don't know what you do, but for me in a tech job, my skills aged me out of taking another job like I had, so I'd have been lucky to make 1/4 of what I made when I ER'd, so it wouldn't have been easy to get back on track with another job.

Others will say that anything over X%, X being 85 IIRC, being as good as 100%. I don't buy that. Sure, 100% isn't bullet proof because a black swan event could ruin your plan at either 85 or 100, but clearly you have a lot less buffer if you are off on your spending estimates.

Is that 90% for 30 years? I'll bet the likelihood of at least one of you (if you are not single) living past that is better than 50/50.

 

[Midpack]

I wouldn’t, but that doesn’t mean I’m right. People have successfully retired with a 75% probability of success and others can’t sleep at night without a 200% success rate.

And it also depends on how much of your income is from “secure” sources (SIRE), how much from your portfolio alone (FIRE) or how risky your portfolio needs to be to achieve your desired probability of success. Then there’s geopolitical risk? Pension/annuity risk? It’s very much an individual decision, and there should always be a Plan B (C, D...).

 

[FANOFJESUS]

Sure why not. You can tighten you belt in bad years. Maybe not spend that 33k

 

[corn18]

I wouldn’t, but that doesn’t mean I’m right. People have successfully retired with a 75% probability of success and others can’t sleep at night without a 200% success rate.

And it also depends on how much of your income is from “secure” sources (SIRE), how much from your portfolio alone (FIRE) or how risky your portfolio needs to be to achieve your desired probability of success. Then there’s geopolitical risk? Pension/annuity risk? It’s very much an individual decision, and there should always be a Plan B (C, D...).

I have a COLA military pension of $49k. SS @ 70 will be $58k. $108k total @ age 70. I have free healthcare for me and my wife (Tricare) until age 65, then I go on Medicare and get a free supplement from Tricare. Lots of life insurance until age 78. I am 60/40 with 25% international.

I have been hoping I could retire @ 55 but needed a package to do it. Now that that might be possible, I would love to move on. I am a VP of business development in the defense world with a top secret clearance so if I wanted to work, I could easily find another job. I'd rather be a pet sitter and work at Ace Hardware.

 

[HI Bill]

If you're willing to forgo the discretionary spending in down economic times, then I'd consider it in your case. In my case, I didn't commit until I was at 100% with a 50% discretionary budget. However, I bought a more expensive house, and the discretionary portion dropped to only 21%. I'm not quite as comfortable with the current budget/spending, but am going to give it a go, come January or February. Worst case, I have to sell the house in a decade or so, but I really don't see that as a likely scenario. But I didn't see COVID-19 coming, so my crystal ball is obviously broken.

So, it's up to your comfort and risk level, and how well-diversified your AA is. If you're reasonably diversified, then the risk is likely minimal, sans Black Swan events, which even 100% wouldn't protect you from. Good luck!

 

[JDARNELL]

I have a COLA military pension of $49k. SS @ 70 will be $58k. $108k total @ age 70. I have free healthcare for me and my wife (Tricare) until age 65, then I go on Medicare and get a free supplement from Tricare. Lots of life insurance until age 78. I am 60/40 with 25% international.



I have been hoping I could retire @ 55 but needed a package to do it. Now that that might be possible, I would love to move on. I am a VP of business development in the defense world with a top secret clearance so if I wanted to work, I could easily find another job. I'd rather be a pet sitter and work at Ace Hardware.

Just think of all that proposal prep consulting you could do or all that watching contractors who don’t have a clearance to work in a secured area if you needed any p-nut butter money.

Take the RIF and enjoy your life.

 

[HI Bill]

I have a COLA military pension of $49k. SS @ 70 will be $58k. $108k total @ age 70. I have free healthcare for me and my wife (Tricare) until age 65, then I go on Medicare and get a free supplement from Tricare.

Did your FIRE inputs include the military pension, SS, etc.? If so, the % is still 90%. If not, then you're probably at 100%.

 

[corn18]

Did your FIRE inputs include the military pension, SS, etc.? If so, the % is still 90%. If not, then you're probably at 100%.

Affirmative. Included both.

 

[Golden sunsets]

I would fear sequence of returns risks, so no, I wouldn't.

 

[Koolau]

Not sure I would go with 90% but keep this in mind: 90% becomes 95% or even 100% if you adjust your proposed spend. You could even do that 2 or 3 years down the road if you need to. Sounds like you have some "wiggle" room in your spend level.

Who knows, in 2 or 3 years, you might refigure and find that you're at 95 or 100%. If we have 3 years of great market returns, you could find yourself at 100% without lifting a finger. SO, I won't offer advice, but I wouldn't personally worry too much. I think I'd worry more about staying at a place that's facing a RIF but that's just me since YMMV.

 

[OldShooter]

Nobody can tell you what your probability of success is. All the various calculators can do is to tell you what it might be if historical numbers repeat themselves. So, IMO 80%, 90%, and 100% are probably numbers equivalent to each other and to "Looks pretty good."

From the FireCalc home page: "How can FIRECalc predict future returns from past performance?

"It can't."

 

[daylatedollarshort]

If I were in your place, I would have cut my planned retirement spending and retired a long time ago. Being retired just seems to save us a lot of money, like having time to price shop more, optimize our insurance coverage and deductibles, make the house more water and energy efficient, renegotiate the cable bill, compare cell phone planes, etc. And most of the expense cuts didn't really change our overall lifestyle.

 

[Dtail]

When does your pension start? I seem to remember your investment assets were reasonably high.
Did you input your SS and pension numbers as yearly amounts?

 

[dtbach]

I have a COLA military pension of $49k. SS @ 70 will be $58k. $108k total @ age 70. I have free healthcare for me and my wife (Tricare) until age 65, then I go on Medicare and get a free supplement from Tricare. Lots of life insurance until age 78. I am 60/40 with 25% international.

I have been hoping I could retire @ 55 but needed a package to do it. Now that that might be possible, I would love to move on. I am a VP of business development in the defense world with a top secret clearance so if I wanted to work, I could easily find another job. I'd rather be a pet sitter and work at Ace Hardware.

Well with the military pension (mine is only $36k) and heathcare with tricare, I think you are golden. Travel with "Space A" and enjoy life now. The top secret clearance (which i had) was golden. Do you want to "w*rk" for another 10 years or enjoy ER??

 

[corn18]

When does your pension start? I seem to remember your investment assets were reasonably high.
Did you input your SS and pension numbers as yearly amounts?

My pension started in 2008. I did put the pension and SS in as annual amounts.

Here's the base budget:

Auto 820
Clothes 500
Pets 200
Food 1,500
Gifts 517
Health / Beauty 400
House 1,869
Entertainment 200
Misc 700
Insurance 652
Medical 605
Cell Phone 120
Utilities 320
Internet 150
Taxes 734

TOTAL EXP 9,287 / mo ($111,447 annual)

Add another $33k / year of unobligated funds on top of that (blow that dough) to get to $145k a year.

 

[jollystomper]

Personally I would not. But you cannot control everything in life. If that happened to me I would focus on cutting my spending and seeing what opportunities there were for side gigs.

 

[Dtail]

My pension started in 2008. I did put the pension and SS in as annual amounts.

Here's the base budget:

Auto 820
Clothes 500
Pets 200
Food 1,500
Gifts 517
Health / Beauty 400
House 1,869
Entertainment 200
Misc 700
Insurance 652
Medical 605
Cell Phone 120
Utilities 320
Internet 150
Taxes 734

TOTAL EXP 9,287 / mo ($111,447 annual)

Add another $33k / year of unobligated funds on top of that (blow that dough) to get to $145k a year.

Did you use 30 or 35 or 40 years, as many folks take their retirement out to 95 y.o.

 

[JDARNELL]

My pension started in 2008. I did put the pension and SS in as annual amounts.

Here's the base budget:

Auto820
Clothes500
Pets200
Food1,500
Gifts517
Health / Beauty400
House1,869
Entertainment200
Misc700
Insurance652
Medical605
Cell Phone120
Utilities320
Internet150
Taxes734

TOTAL EXP9,287 / mo ($111,447 annual)

Add another $33k / year of unobligated funds on top of that (blow that dough) to get to $145k a year.

Looking at your budget numbers I think you have some fluff in there. For example. Medical. With Tricare your gonna pay the small enrollment fee each month and have a yearly out of pocket cap of $3500 or so for your family. Will you really need that much monthly cloths and insurance in retirement? What about that house payment. Can you restructure that puppy by paying down recasting or refinancing. It’s all about cash flow.

I walked away after a short bridge career after I retired from the military. I was 46 at the time. The biggest adjustment was the mental one. I wouldn’t trade it for the world. Everyday I realize it’s one day less.

I think you become wealthier when the Fog of Work lifts. Do a google search for that phrase with Nords. It’s a good article that will speak to you as a BD guy.

 

[corn18]

Did you use 30 or 35 or 40 years, as many folks take their retirement out to 95 y.o.

35 years. COLA pension + SS ($108k) cover all planned expenses at that point.

 

[Dtail]

35 years. COLA pension + SS ($108k) cover all planned expenses at that point.

Hmm tough one.
Many folks on this site who do make use of retirement calculators usually look for a 95% success rate, or sometimes a 100% success rate.
However with a decent discretionary budget, I would personally pull the trigger.

 

[cyber888]

Will you pay the auto/car when you retire ? That's $820/mo or almost $9,900 a year. $500 in clothes - well, if your not working anymore, you can reduce this by $200, that's another $2,400/year. Gifts - $517/month or $6000+ a year - I think if you retire, people will understand you don't need to give them as much. You can cut $15,000 /year.

 

[corn18]

Will you pay the auto/car when you retire ? That's $820/mo or almost $9,900 a year. $500 in clothes - well, if your not working anymore, you can reduce this by $200, that's another $2,400/year. Gifts - $517/month or $6000+ a year - I think if you retire, people will understand you don't need to give them as much. You can cut $15,000 /year.

The car budget is for gas, service and a $35k car every 5 years.

I don't buy clothes. That's my wife.

I think we could chop quite a bit out of that base budget, but that's what I use for planning because that is our current budget.

 

[CRLLS]

Personally, I would wait until I got a 95% success without changing my lifestyle. Getting a PT gig once RIF'ed might help you if needed.

Back in my day 80% was just a "C", 90% was a middle "B" and 95% was just above the bottom end of an "A". Back then if I tried telling my folks that a "C" was just as good as an "A" it wouldn't fly. I guess I'm still stuck in that era financially.

Congratulations on getting financially to where you can be considering RE, possibly even getting there, and having some wiggle room if things go South.