Ok - thanks to you guys....

[macnjus]

I am getting ready to pull the trigger, I have told my boss that I wll resign next week. The big question for you all....I am 49 years old, I have modelled out a 3.2% withdrawal rate to last for 46 years, so, the big question.....will I be ok !!!



I think so -- working with a monte carlo of 5.4% returns, 6.4 SD and 3.1 inflation produces 94% ish in the Firecalc Monte Carlo, but what do you think ?

I would just hate to look back in 2 years and say I should have taken the opportunity to keep busting my ass on Wall Street for the hope of making another couple of bucks.

Thanks for any help you can be...looking forward to being .....FIRE'd.

 

[GolferAndy]

So you're assuming only a 2.3% real return over the remainder of your life? You must surely be planning a conservative asset allocation. Mind sharing what it will be?

 

[samclem]

First, if you've told your boss that you will resign next week, you should consider yourself resigned. He/she probably thinks of it that way.


The biggest unknown for many folks is health care.

 

[macnjus]

Yes, I am sure he considers me resigned, but he offers me the chance to change my mind. Certainly the return, is conservative, but here is what I am planning:
40% muni, 20% hedge fund of funds, 40 % equities. I am planning on 15K per year for HC, going up at 4% real per year, modified by 50% payments via medicare.

I like to be conservative when planning for the next 45 years.

 

[Cut-Throat]

I think the big question is your Budget? - If 3.2% amounts to your bare bones expenses and you could not cut down even in a severe market downturn, you might be a little at risk. Also it depends on what you define as OK?

If however 3.2% is $200K per year, you've got a lot of room to move around.

So my answer is - I don't have a clue, because I have no idea what 3.2% represents.

 

[macnjus]

good point ct - yes the 3.2% is somewhere north of the amount you mention.

 

[Cut-Throat]

good point ct - yes the 3.2% is somewhere north of the amount you mention.

So if 3.2% is over $200K per year, you are way out of our leagues! That would be a nest egg of over $6.5 Million!

I don't think you need anyone's advice here.

 

[GolferAndy]

Married? Kids? College educations to fund? Any pension at a later time? Spouse working?

Basic math tells me your worth is at least 6.5Mil. That's pretty astonishing at age 49.

 

[macnjus]

Ah but it's all relative isn't it ct ? The wife gets accustomed to certain ways of living , the husband joins certain clubs, and presto, $200K all of a sudden doesn't seem like so much to the persons involved; not trying to be a jerk, but there are some very smart folks on this forum, and I am curious how people feel about a 3.2 wd rate over 46 years, regardless of how much money that is.

For me, given the conservatism of the numbers I mentioned, I think I should be OK, but it is still very nerve-wracking actually pulling the trigger and joining you all.

 

[macnjus]

Thanks Golferandy, yes, 6 more years of college to fund, which is a bit daunting. Some pension and annuity coming at age 65, total being 140k per year in nominal terms. Again, not trying to be a jerk or a show-off, but I honestly care what you people think. I have been a lurker on this forum for a while, but will become more of a regular poster should I successfully FIRE.

You folks on this board are honestly more sophisticated than most planners etc I have encountered over my past 5 years, so I care about your opinions.

 

[Cut-Throat]

It is relative! - And yes I'll try to explain myself. If your current bare bones expenses are 3.2% and you would not cut back and would look for a job instead, then you are cutting it close.

The number is different for everybody.

Here is the formula I came up with.

(( Bare Bones annual spending * 2) - Annual Pension Amt) * 25 = NEST EGG

This will give you flexibility to cut spending during a market downturn. - The flexibility is the (*2) part!

So for example you decide that $20,000 would cover all the necessities for the year. Food, Clothing, Taxes, Insurance, Shelter, Transportation. And that you received a $10K pension per year.

((20K * 2) - 10K ) * 25 = $750K (for an average Joe)

 

[macnjus]

Thanks CT - good advice - yes I think I am OK under your guidelines. I have a reasonable spouse who can cut when necessary.

 

[REWahoo]

mac, yes it's all relative. However, with the numbers you are working with it is difficult to see how you won't be OK for the next 100 years. If you are talking a 3.2% initial withdrawal rate from a $6M+ nest egg plus a $140k annually at 65 (16 years from now), plus the ability/discipline to tighten your belt if necessary, you're there.

And you will note I said that with only a tinge of envy and sarcasm. Must be the holiday spirit.

 

[macnjus]

Thanks wahoo - I appreciate all coments regardless of the spirit/sarcasm, not that yours was bad in any way.

 

[Ed_The_Gypsy]

Of course, it will be a little smaller after the divorce.

 

[macnjus]

Oh good one ed ! - Actually I battled through the divorce aspect around 10 years ago and now all is well, though it wasn't well at the time of the battles !

 

[donheff]

Wow Macnjus, it just goes to show that no matter how much you accumulate you still worry about whether it will all go up in smoke. Maybe working on Wall Street contributes to the sense of imminent doom. I have a good COLAd pension and a pretty hefty nest egg. All calculations show that we have it made in any reasonable scenario, yet DW wants to work a couple of extra years -- just in case. With your net-worth I would assume you have some relatively easy cuts you could make if things really go south. For example, I have a weekend house on the tidal Potomac. It is nice to have but DW and I agree that - come the great depression - we will jettison the place. Even if prices are catastrophically depressed the reduction in expenses would allow us to easily live within my pension.

If you read this board you know that you are already as financially prepared as you can reasonably get. If you are still worried the only thing to do is plan for highly unlikely scenarios. And then there are the scenarios that probably are not worth planning for. If an apocalyptic plague strikes it won't matter how much we have and it won't matter if we are working or not. I feel the same way about a nuclear bomb detonated at the Capitol one mile away.

 

[macnjus]

Thanks Don. It is really disconcerting to adjust to the fact that I will not have a regular income any more, and nobody will send me any kind of check for 16 years. I agree on the no point in preparing for armageddon, but I am still a bit spooked, so I just try to be as conservative as I can within some semblance of reasonableness.