Your assessment of my plan, please

[Gunny]

I want to semi-ER in August at 52. 40k pension which will start receiving a COLA in ten years. In four years I will start getting an additional 500 per month in a special supplement until eligible for SS at 62. I have 450k in TSP, 125k in Roth IRA, 75k cash. All retirement accounts invested 60/40 using indexed funds. Tri-care covers medical until 65. Small mortgage of 850 per month in a LCOL area. Pension covers living expenses including mortgage. 72(t) distributions from TSP will cover extras (fun, travel). Won't touch IRA. I plan to consult part-time for an extra 5-10k a year. I will take SS at 70 and DW will have a small (500 per month) SS at 62.

I'm tired of fighting traffic and craziness at work. I want to move to the South and spend more time with my ten year old son pursuing outdoors fun stuff. FIRCALC gives me 95-100 % depending on desired income amounts I use (60k to 70k).

Is anyone else ERing with similar numbers? Anyone have any thoughts on my plan? Thanks.


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[frayne]

The big question is, what are your expenses ?

 

[Gunny]

Expenses come in at around 3.2k per month, including mortgage.


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[Ready]

So your expenses roughly equal your pension, which is a good start. But with no COLA for ten years, your expenses may eventually exceed the pension, so you will have to anticipate that possibility. I think you could probably do it, but if it were me, I would want a bit more cushion in savings given your young age. Others may recommend differently.

 

[growing_older]

Your pension covers current expenses (except for no COLA for 10 years). In 4 years you have reinforcements of 500/month coming online. In 10 years you could start SS or wait for a higher benefit. Your DW has another 500/mo reinforcement coming online at that time. You have another 650K you don't need currently. Sounds like you have all you need to continue at more or less your current lifestlye unless there is some runaway inflation that kills the value of these pensions. You should run FIRECalc to confirm.

 

[dallas27]

I think your are fine, but i would work to kill that mortgage, you must be close. Good choice to semi retire early and prioritize you time and family, many just can't see that choice clearly.


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[frayne]

Probably doable with a bit of discipline. Huntsville has traffic ?

 

[MikeWillRetire]

When you ran firecalc, did you use assume no cola? That's what I would do to be conservative.

 

[MikeWillRetire]

I want to move to the South and spend more time with my ten year old son pursuing outdoors fun stuff.

I thought Huntsville was the South.

 

[RE2Boys]

Probably doable with a bit of discipline. Huntsville has traffic ?

I assume Huntsville AL, which is five times population of Huntsville, TX.

That being said, after visiting CA or DC area, I really appreciated the planning that went into the Huntsville AL area roads, especially if you were federal and could cut through Redstone Arsenal. In fact, I early retired in Huntsville in 2000. Don't forget that a federal pension is not taxed by the state (rate is for practical purposes 5%). In profile you mention as being a retired Marine, where does that pension fit in?

 

[samclem]

Any possibilities of potential additional expenses?
-- Another young 'un?
-- In general, I think the expenses of raising a child go up as they enter their teen years. So, your son may cost a bit more from here on out.
-- If you move to an area without a military treatment facility (MTF), as a retiree you won't be able to use TRICARE Prime and medical costs for your family would go up compared to what you pay now. I think the new rule is that your home must be within 50 miles of the MTF, but definitely check on this yourself. If you are using the commissary now, your grocery prices might go up (a little)
-- I don't know your feelings about helping for college or other educational expenses for your son, but they weren't mentioned here.

Other: If your pension will cover all/nearly all your "must have" expenses, then consider using a "% of year end portfolio balance" withdrawal method (rather than a "starting amount on year one adjusted every year for inflation"). This will link your withdrawals to the performance of your portfolio, and it will assure you never run out of money (though if your portfolio loses inflation-adjusted value over time, your real spending amounts will decline). Also, because you withdraw less after your portfolio takes a hit, it does a good job of helping portfolios recover from downturns. It can also allow increased spending than a straight "adjusted for inflation" withdrawal method, if the portfolio takes off in value. The year-to-year variability of withdrawals isn't for everyone, but it might work well in your case since your pension will cover all your "gotta do" spending. FIRECalc can model this type of withdrawal method, the output shows how the available spending amounts, adjusted for inflation, would have turned out. It's very useful, and you can play around with different AAs to see how they would have done. (Past performance is not indicative of future---well, you know)

Almost everything depends on how your wife feels about this.

 

[samclem]

Another consideration: How hard will it be for you to re-enter the workforce at your present pay once you quit? If you are concerned about the amount of "cushion" you have now, and it would be very hard to get back to work at your present pay (loss of contacts, highly dependent on living where you are now, changing technology, expired security clearances, etc), then that would be one argument for hanging on another year. I'm not saying that's the right decision for you and yours, but it is a consideration.

 

[Gunny]

Thanks for the advice. To answer a couple of questions; I have been living in Maryland and did not update my profile, my Fed and military retirement will combine to equal the 40k (bought my military time towards my FERS time), I have already paid for my kid's college, I have Tri-care standard with an annual out of pocket cap of 3k, I plan to stay connected with colleagues by doing part-time consulting/work in my field.


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