How Much is Needed To Retire? (A Twist)

[gayl]

Anon 5: I live in the SF Bay Area, bought in 1979 so I am definitely under Prop 13. Can't sell for a few more years if I want to keep the tax rate via Prop 60 / 90

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http://www.assessor.saccounty.net/ge...base-year.html: Under certain conditions, persons aged 55 and older, or severely disabled persons of any age may transfer the Proposition 13 factored base year value of their principal residence to a residence acquired or built as its replacement (ref. Prop 60 & Prop 90, R&T 69.5).

Age: 41 - Retired in 2003

Pretax: 1M
Post-tax: 160K (401K)
Home Equity: 70K - Plan to pay off 100K mortgage if decide to stay in home since have not determined long term or semi-long term location yet.

Future Income (long way off yet)
SS - 24K/yr
Pension: 30K/yr

Annual Expense: 35K with mortgage/20K after pay off between now and future income. Still adjusting to 120K expense pre ER. In all honesty, I do miss the lifestyle and if I have more money to spare, I could spend more (as in don't need more but if it is there, I'll find a use for it). I don't regret the trade-off of financial freedom for personal freedom. I do wonder though how many people actually try to live on an ER income pre-ER and whether after they have done it, they would still make the choice.

[haha]

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Age: 41 - Retired in 2003 Future Income (long way off yet) SS - 24K/yr Pension: 30K/yr

Anon5, I am puzzled. At your age you must have only worked 20 years max. How did you qualify for a $30,000 pension in that short time? What sort of employer did you have? I would like to pass this info to my sons.

Mikey

[haha]

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Mikey There were some tongue in cheek comments about - about our only cast iron skillet - I had to sleep sometime - you're not going to take it with you - #^* and !#+^. So our budget got a little more frivolous the next year.

I guess I understand. You got tired of trying to sleep with your skillet, thought if you loosened your purse a little your girlfriend might let you back into the bedroom?

Good decision amigo.

Mikey

[anon3]

Mikey,

I very much appreciate you taking time to review my numbers and offer an opinion that I am in good shape going into ER. Based on Firecalc and similar tools, I kind of thought I would be OK, but it is very good to have an independent opinion.

You mentioned health care costs -- they are included in my 24k annual income requirement. I will have decent retiree health coverage from my employer. About 15% of the 24k is for health care. I expect that percentage to increase in the future as healthcare costs inflate faster than other costs.

Thanks again for the analysis.

anon3

Intending to retire next fall when I will be 33 (and my spouse 32).

Will have approx $1.1M post-tax cash. Need to buy a home out of this though. No debts. Currently live in California but will be relocating to a rural(ish) bit of the North East. Expect to draw $30K p.a. for ever more out of what's left.

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Anon5, I am puzzled. At your age you must have only worked 20 years max. How did you qualify for a $30,000 pension in that short time? What sort of employer did you have? I would like to pass this info to my sons. Mikey

First, sorry I didn't keep track of the 'Anon numbering scheme' so for the record, I'm not Anon5 (capital 1st letter).

Mikey - I would venture to say that the answer to your question is any of the 500 Fortune companies that have a good pension plan. The pension is calculated based on 'X' number of of highest average monthly earnings. 'X' is number of months from 5 to 10 years depending on the company. So the point is that the pension does not necessarily mean that you spent 20 years of your career with one company which I did not. I only spent my most highest earning years with the 'pension income' company.
I do think, though, if you really want to ER, pension, however generous, is not the criteria to base your career decision on.

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Intending to retire next fall when I will be 33 (and my spouse 32). Will have approx $1.1M post-tax cash. Need to buy a home out of this though. No debts. Currently live in California but will be relocating to a rural(ish) bit of the North East. Expect to draw $30K p.a. for ever more out of what's left.

Do you have any kids? If so what age(s)?

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Do you have any kids? If so what age(s)?

No. I expect we will have later. I want to make sure we're happy with being ERed before then and that the plan is *actually* going to work. I like the idea of us both being around 24x7 for our children and homeschooling

I have a comment about following (not following)
directions. I'm a pretty smart guy, always tested
in the 99th percentile on IQ. However, I usually ignore
directions from others, and I have almost no respect for authority of any kind. I barely graduated from high school, and although I was president/CEO of 4
different corporations, I was fired from the 2 that I didn't
own. Anyway, giving me directions is an exercise in
futility. Like Frank Sinatra, I did it my way. Still do.

John Galt

[haha]

anon5-thanks for the pension primer. I was too short term oriented to give pensions a thought. I can see now that they are a really really good thing. In my real (not virtual) life, almost always if if meet a fairly young man or woman who diesn't have to work it's because of pension- not savings or investment success.

Mikey

[ESRBob]

Anon-5 -
Are you drawing the 30k pension now or are you assuming that is the amount you'll get at normal retirement age? I'm intrigued if the former: are big company pension plans letting people routinely start drawing right away if there are enough years of service or do you typically have to wait to 65 or so?

thx
ESRBob

Age ER'd: 49 (Spouse 48, retired same year`)
Year: 2003
Assets: $2m investments, ~50% 401Ks.
Pensions: (4 w/o COLAs) total ~$23K starting @ 55
House: 5.25%, 30yr fixed mortgage on $150K ($825/month)

ESRBob,
No. That's why I mentioned that it is 'a long way off' in my previous post and my annual expense is what it is. If it was otherwise, I would double my allocated expense in a NY minute, spend every last cent and never look back. I believe in only saving what I need (based on my current assets/established financial plan/reasonable assumptions) and not a cent more.

Although, in my ER plan and current lifestyle, I'm not factoring in either SS (let's not go there) or pension in the future because I can't get a good sleep on what is outside my control (relatively speaking) and who knows what's going to happen one year from now let alone beyond that. Why did I include them in my bird eye view stats? Because I think of them as my security blanket, it's nice to have and to hold but not much good for anything else.

Age ER'd: 51 (Spouse 50)
Year: 2003
Portfolio (at retirement date):
$900K (Post Tax)
$800K 401k (Pre-Tax)
House:
$300K no mortgage
Pension:
DBF $36K (no COLA)
Plus partial paid retiree health insurance.
Initial annual spending budget:
$82K
Includes:
$19K taxes
$2K for our share of health insurance.
$21K other mandatory spending (food, utilities, home maintenance/ insurance, vehicle operating costs, med co-pays, etc.)
$40K discretionary spending (clothing, furniture, travel, vehicle replacement, hobbies, recreation)

NOTE: Could theoretically increase annual spending by an additional $22K if willing to risk a 4.0% withdrawal rate.
Portfolio value has since increased to $1.9M.

[amt]

These are very helpful comments. These show that a lot of folks have huge margins of safety before deciding on ER----well below 4% withdrawal rate, especially if monthly guaranteed pension and near-future SS payments are taken into account. Bravo.

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Here is the Answer format I am looking for. I think it will be helpful to prospective Retirees. All our lifestyles will be different and at the end of it, hopefully we can get an average, if enough of you participate. Do not include Cars and general purpose assets like furniture Jewelery etc. Any comments are of course welcome. I think one can do it on $40 per year. Me: Age ER'd: 49 (Spouse 44) Year: 2002 Assets: $1m Cash (Post Tax) $ 560K 401k (Pre-Tax) No House (We Rent) Total Net Worth in Cash tupe assets is $1.56m but have to pay rent. About $1000 per month. Anon

Age ER'd: 46 (Spouse 46 - retired at 43 in 2000)
Year: 2003
Assets: $3.5m taxable + $1m house (no mortgage), $1m 401k
Total annual spending: $80k
No pensions at all and not counting on SS
Last kid just gone

We should have packed it in much earlier. We could live on $40k a year since that's how we piled most of the money up in the first place.

I am a voracious reader but didn't come across Trinity until late in 2000. Hit smack in the face with that 2x4, it took a good year to percolate through my stubborn layer and then another 18 months to plot a way out. I wasn't about to walk away from all sorts of nearly vested goodies that amounted to nearly $500k and it took almost that long to decide on a good place to shift to.

[amt]

I kinda feel discouraged, seeing that most folks who do ER are already multi-millionaires, which will be a long way for me. Kudos to those who have made it.

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I kinda feel discouraged, seeing that most folks who do ER are already multi-millionaires, which will be a long way for me. Kudos to those who have made it.

As a young pup, I read somewhere that only the first million is hard. Just out of school in 1977, we started with good educations but a net worth of zero. It took us twenty years to collect the first million. The rest came in six short years (and in case you're wondering, no it wasn't from the Nasdaq runup).

Twenty years of work, saving, spurning dryer sheets (double coupons let us spend zero on laundry detergent 1986-1993 even with 2 kids, until P&G wised up), always taking freebies (enrolled in every ESOP, contributed enough to get the max 401k match, took any course our employers would pay for). Twenty years!

Then everything paid off at once.

Be patient and keep the faith. It could take you twenty years too. You'll still be young. You have a big advantage over me - I didn't know about any of this.

Damn, some of you people have socked away some serious cash! Well done

I'm thinking that with $1.1M at 33 we can can make it in ER. I guess if my wife and I kept slogging away at our well paying but soul destroying jobs for the next 20 years we could retire at 50 with multi-millions. I don't think we could bear it.

So, if the first mil is hard, how did you make the following ones so quickly? Just investment income starting to snowball?

Impressed and heartened