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View Poll Results: Portfolio Size Needed for FIRE.
I am not retired yet: $500k 20 4.44%
I am not retired yet: $750k 25 5.56%
I am not retired yet: $1mm 54 12.00%
I am not retired yet: $1.5mm 81 18.00%
I am not retired yet: $2 mm 67 14.89%
I am not retired yet: $2.5 mm 31 6.89%
I am not retired yet: $3 mm 75 16.67%
I am retired: $500k 16 3.56%
I am retired: $750k 15 3.33%
I am retired: $1mm 20 4.44%
I am retired: $1.5mm 20 4.44%
I am retired: $2mm 11 2.44%
I am retired: $2.5mm 1 0.22%
I am retired: $3mm 14 3.11%
Voters: 450. You may not vote on this poll

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Would you retire on this?
Old 08-25-2007, 03:28 AM   #1
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Would you retire on this?

We have an opportunity to consider ER. DW is taking a RE offer from megacorp.

It takes care of group health care & dental coverage (small cost). The megacorp is very strong (The biggest and leader in their industry). No reason to believe that they would cancel Health plan or jack rates... They have been around forever. Plus there are other retirement benefits that help a little.
  • For the purposes of this poll assume we have no debt (we have little debt).
  • We are 51.
  • We live in the mid-west (moderate cost of living).
Resources:
  • I will have a small pension If I stopped working available @ 65 It would be worth about $25k (todays $) Deflated @ 3.5% would be approx $15k spending power in 14 years.
  • DW - no pension. Company contributed cash each year. Consider it like a 401k (part of the portfolio)
  • Of course, we will both have SS. She will probably take it @ 62. I might wait till 66.x.
  • Other: own house. Vehicles.
  • Everything else is in tax deferred (401k, IRA) and after tax investments. Stock and Bond MF. Low cost of course.
  • We are both in very good health
Current Expenses (while working):
  • DW is on a few prescriptions (nothing major).
  • While working we spend approx 40-45k/yr. (assuming mortgage is gone). We will downsize our house. This will clear the mortgage, and reduce expenses further about 2k/year.
Retirement expenses:

We would like to travel. Depending on how much travel occurs in a given years, our expenses could fluctuate. Our needs could range from $45k/yr (lowest) to prehaps as high as $90k/yr. We figure that most years will be perhaps $60k in todays $.


Poll Question (Please answer based on your personal Retirement status): How much would you need in the retirement portfolio to feel 99% confident that you could retire and have the lifestyle described? And not be in a vulnerable position to have to go back to work.
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Old 08-25-2007, 04:46 AM   #2
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I looked at your info and think you'd be very safe at $1.5MM. If you were willing to take some risk, you'd probably be fine with $1MM. I believe in Bernicke so I'm assuming you will slow your expenses and reduce traveling by the time you are 70.

Your wife is getting a package but you never said how much her pension will be.
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Old 08-25-2007, 05:18 AM   #3
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Quote:
Originally Posted by chinaco View Post
We have an opportunity to consider ER. DW is taking a RE offer from megacorp.
Appears to be a great opportunity to exit and enjoy life. We are waiting for a few more years to be eligible for medical benefits at a discount rate.
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Old 08-25-2007, 09:42 AM   #4
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I also put down $1.5 because you said 99%...

But I would answer $1.0 if you went down to 95%

Those extra 4% cost a lot....
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Old 08-25-2007, 10:13 AM   #5
 
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I am retired with well under the $500,000 minimum that you list. My wife retires in 2 1/2 years. We will have her pension and medical benefits, my small pension and our SS to live on. At this point it doesn't look like we will have to tap our investments for money to live on. When my wife retires we are going to sell our house here on Long Island and move out west where we will be a home for cash and invest the balance. I have overestimated how much I feel we will need in income to live a good but not overindulgent life.
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Old 08-25-2007, 06:37 PM   #6
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I assume that the people who voted as retired with less than a 1 million get a pension. Am I assuming correctly?
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Old 08-25-2007, 06:46 PM   #7
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Quote:
Originally Posted by chinaco View Post
Poll Question (Please answer based on your personal Retirement status): How much would you need in the retirement portfolio to feel 99% confident that you could retire and have the lifestyle described? And not be in a vulnerable position to have to go back to work?
It sounds like you've done a great job of identifying the pensions, assets, and healthcare expenses. It also sounds like your budget has a huge amount of wiggle room-- $60K -25% + 50%.

Could you nail down your budget's regular monthly expenses and its occasional capital expenses more closely to reduce that 25-50% swing? Would that help your decision?

Would you be traveling more like the traditional two-week work break (retail airfare & hotels) or like the Kaderlis? How would that affect your budget?

Finally, if you're looking at some streams of income in your 60s, could you jack up the spending over the next 14 years? You might be able to get a FIRECalc run that lets you start portfolio withdrawals at 6-7% for the first part of your retirement in the expectation of making it up later with SS & your pension income. But you'd have to sleep comfortably at night without turning yourself into a miser.
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Old 08-25-2007, 07:38 PM   #8
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Assuming your house and vehicles are paid off, and you have access to reasonably priced health insurance, it means more of your expenses are discretionary in nature than would be typical of retirees.

This is a good place to be. With your stated annual expenses of $60k, I'd go with 25x that much --> $1.5m.

With an expense profile of what you described I'd be willing to do that at 99% confidence level for myself.
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Old 08-25-2007, 07:46 PM   #9
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I ran a thread very similar to this a few months ago. I'll see if I can find it. If I remember correctly most people are looking at between 1 million and 1.5 mil to FIRE

I'm shooting for closer to 5 million....an option you didn't give.
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Old 08-25-2007, 07:50 PM   #10
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Here is the similar thread

http://www.early-retirement.org/foru...ugh-28141.html
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Old 08-25-2007, 08:58 PM   #11
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There have been several polls and as I recall, few had voted less than 1 million in some other past polls....as always, I suppose it depends how it is asked...Not including a pension or an income stream from a working spouse, would certainly bias the poll...
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Old 08-25-2007, 09:01 PM   #12
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Quote:
Originally Posted by chinaco View Post
We have an opportunity to consider ER. DW is taking a RE offer from megacorp.

It takes care of group health care & dental coverage (small cost). The megacorp is very strong (The biggest and leader in their industry). No reason to believe that they would cancel Health plan or jack rates... They have been around forever. ...
While I cannot answer your question directly, I urge you to consider the possibility that your company may surprise you by cutting or eliminating your medical benefits after retirement.

That's what happened to me and thousands of my fellow retirees. We worked for an industry leader that had been around seemingly forever.

Health care costs continue to rise so fast that they became the major uncertainty in determining whether early retirees under 65 years old would have to find work again.
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Old 08-25-2007, 09:50 PM   #13
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Originally Posted by template View Post
While I cannot answer your question directly, I urge you to consider the possibility that your company may surprise you by cutting or eliminating your medical benefits after retirement.

That's what happened to me and thousands of my fellow retirees. We worked for an industry leader that had been around seemingly forever.

Health care costs continue to rise so fast that they became the major uncertainty in determining whether early retirees under 65 years old would have to find work again.
I am sorry that they did not fulfill their promise.
What did you do? What's cost (premiums) to get coverage?
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Old 08-25-2007, 10:02 PM   #14
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I voted 3+. The reason for this was travel. One of our FIRE goals was travel. The one expense we underestimated was :confused:tada:confused: TRAVEL.

Try your numbers again with worst case costs for travel. One of us is right and it may not be me.
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Old 08-25-2007, 10:27 PM   #15
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I am sorry that they did not fulfill their promise.
What did you do? What's cost (premiums) to get coverage?
My former employer still offers group insurance to retirees and their dependents. Retirees costs are partially subsidized and dependents are no longer subsidized at all.

My family insurance costs were $19/month when I retired in 2001. Now, I pay $200/month for me alone and my wife has had to buy her own medical insurance and dental/vision coverage for both of us through her employer, COBRA, etc.

My former employer eliminated other retiree benefits, e.g., life insurance.

I am 55 years old and too young to qualify for Medicare benefits.

I think we'll make it, barring a serious illness. When the company cut retiree benefits (after we retired), it introduced doubts into our financial forecast which had been bright.
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Old 08-25-2007, 11:55 PM   #16
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Template,

Thanks for the info. I am holding out for 4 more years to qualify for medical insurance assistance. I will pay 40% of cost, which is $400 (in today's dollars) per month for both of us. I am hoping that my current employer will keep this benefit.

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Old 08-26-2007, 02:47 AM   #17
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Originally Posted by Nords View Post
It sounds like you've done a great job of identifying the pensions, assets, and healthcare expenses. It also sounds like your budget has a huge amount of wiggle room-- $60K -25% + 50%.

Could you nail down your budget's regular monthly expenses and its occasional capital expenses more closely to reduce that 25-50% swing? Would that help your decision?

Would you be traveling more like the traditional two-week work break (retail airfare & hotels) or like the Kaderlis? How would that affect your budget?

Finally, if you're looking at some streams of income in your 60s, could you jack up the spending over the next 14 years? You might be able to get a FIRECalc run that lets you start portfolio withdrawals at 6-7% for the first part of your retirement in the expectation of making it up later with SS & your pension income. But you'd have to sleep comfortably at night without turning yourself into a miser.
Hey Nords -- The swing is due to anticipated discretionary spending for travel.

We would probably be doing extended travel. And not staying in 4-5 star hotels... instead, we would lease something in an area for 1-3 months.
You are correct. I could be overestimating.
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Old 08-26-2007, 04:47 AM   #18
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I was probably not clear enough in my question. I think some may have misinterpreted it. But I cannot go back and edit it because of the edit time limit (ANDY).

I put some info in about our situation and was trying to ask people to comment whether or not they would RE if they had the exact same situation that I described... using my parameters and their sense of risk and planning. In other words, if they had my situation, how much money would you need in the portfolio to RE given my age, same health, resources... etc.

My goal was to cross-check my thoughts about the portfolio size needed against others.


Anyway... Thanks to all for comments and taking the poll.
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Old 08-26-2007, 06:49 AM   #19
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chinaco,

Health insurance in retirement is the big wild card for all of us. You believe you will have it; but as others have pointed out, it can be taken away. Private health insurance is available and every state has a policy of last resort. In Texas that works out to about $7,000 per person with a $5,000 individual deductible. Ouch. But, that's what I'm looking forward to.

I think the $1.5MM amount would be absolutely safe for your budgeted income and expenses. You'd have lots of cushion for travel and could absorb loss of heath insurance without totally crushing everything.

I know it's a big leap of faith to do it. I haven't taken the plunge even though I've shown my anal-retentive self I'm FI on paper.
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Old 08-26-2007, 07:16 AM   #20
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chinaco,

Health insurance in retirement is the big wild card for all of us. You believe you will have it; but as others have pointed out, it can be taken away. Private health insurance is available and every state has a policy of last resort. In Texas that works out to about $7,000 per person with a $5,000 individual deductible. Ouch. But, that's what I'm looking forward to.

I think the $1.5MM amount would be absolutely safe for your budgeted income and expenses. You'd have lots of cushion for travel and could absorb loss of heath insurance without totally crushing everything.

I know it's a big leap of faith to do it. I haven't taken the plunge even though I've shown my anal-retentive self I'm FI on paper.
There is a complicating factor that I did not put in the poll and initial statement.

If I wait 4 more years, I will qualify for my pension @ 55 + Group health benefits from my megacorp. This would give DW and I a backup plan on the health coverage since we could each be in our respective plans with the other as a spouse. It might cost a little more... Right now I am just mulling over the options.

I must admit, I have been planning to RE @ 55 for about 20 years now. To accelerate ER takes me a little out of my comfort zone mainly because of changing the basic plan. I am just being cautious.
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