57 year old looking to break out of mega corp

[escoff]

New to board as poster, but have been purusing for over year now.
Im 57, DW is 56 and we are looking to ER in 2008.
I have non cola'd pension from previous employer @ 31K per year.
My DW will have a cola'd pension = 62K per year when she checks out.
Our investments are currently
870K in IRA, 401K,403B with 60/40 mix equities/bonds
113K taxable mutual funds, company stock and stock options.
40k cash mm and cd's.
Our projected spending in retirement including healthcare should be 105k.

Looking at working part-time to 62 when DW will start SS.
Im hoping to wait til 66 for SS.

Looking for unbiased feedback to plan.

 

[Coach]

escoff, welcome to the board!

Have you checked out FIRECalc? It's a fine tool for retirement planning.

Coach

 

[HobbyDave]

For some quick estimates, it seems that your numbers will work. You'll need to let your investments grow to be able to replace your non-cola'd pension as it slowly decreases in real value, but otherwise it seems like somewhat of a no-brainer. Of course, if you decreased your expenses by 10-20k, you'd be coasting easily.

Are you working part-time for fun, or because you feel that you need the extra cash? 105k in expenses is pretty high, it should be pretty easy to lower that a bit if you wanted to fully quit?

 

[Texas Proud]

Heck... if you have 90K plus of pensions.... then why are you waiting

 

[Alan]

escoff, welcome to the board.

Looks like you are all set to RE, congratulations. Add into the mix SS and you should have plenty to cover your $105k/year lifestyle.

 

[RetireeRobert]

New to board as poster, but have been purusing for over year now.
Im 57, DW is 56 and we are looking to ER in 2008.
I have non cola'd pension from previous employer @ 31K per year.
My DW will have a cola'd pension = 62K per year when she checks out.
Our investments are currently
870K in IRA, 401K,403B with 60/40 mix equities/bonds
113K taxable mutual funds, company stock and stock options.
40k cash mm and cd's.
Our projected spending in retirement including healthcare should be 105k.

Looking at working part-time to 62 when DW will start SS.
Im hoping to wait til 66 for SS.

Looking for unbiased feedback to plan.

Looks good to go. Start your countdown to 2008.

You want income $105k. You will have $93k from pensions, 2/3 of which will be cola'd. You will have a shortfall of only $12k from your goal income. With slightly over $1 million investments/savings, you can set aside $300k of that to call an emergency reserve for unexpected medical, nursing home, family world tours, other extraordinary things.

So with $700k retirement savings you can use SWR rate of a miserly 2.5% (see the Firecalc calculator at this forum) to produce annual of $17,500.

$93,000 pensions and $17,500 gives you $110,000 income. You have got it made in the shade.

5 years form now DW starts SS at age 62 for an additional bonus. Why not have her wait to 66? Maybe, maybe not. I think somewhere there is discussion of strategy for married couple on taking their SS's. There could be different ways to play this. If you wife gets more SS on her own record than she would on half of your (and vice versa for you), then each of you make your decision when to take your SS based solely your own earnigns records, needs for the SS income, taxation of that SS income, and most of all maximization of SS over your lfespan.

I think the "when to take SS" question may be the most complicated puzzle you two have. You will not "need" that SS income for sure at age 62. Will you "want" it at age 62? Perhaps the DW take at 62 and you take at 66 solution may be as good as any. That solution would provide "insurance" (hedging if you will) against many potential developments.

Welcome.

 

[escoff]

Thanks to all for replies.
However I need to correct pension amounts are in pre tax dollars.
I currently live in state that does not tax pensions. Only subject to frderal, estimating net @ 80K.
Not sure if this changes previous threads.

 

[RetireeRobert]

Thanks to all for replies.
However I need to correct pension amounts are in pre tax dollars.
I currently live in state that does not tax pensions. Only subject to frderal, estimating net @ 80K.
Not sure if this changes previous threads.

No. My answer assumed you would be paying taxes on your annual desired income. Now if you had "wanted/needed" $105k annual NET of taxes, that would change things. But you just say you only expect $80k net out of the $105 so my advice stands.

You two look hot to trot in my opinion. Go for it, full speed ahead

 

[escoff]

105k is needed net of taxes.

 

[Alan]

105k is needed net of taxes.

Still not a problem - try running FIRECALC with all your figures including SS and you'll see you have plenty of cushion to pay taxes and net $105k/yr

 

[RetireeRobert]

Still not a problem - try running FIRECALC with all your figures including SS and you'll see you have plenty of cushion to pay taxes and net $105k/yr

I agree. You will not have a problem.

$93K pre-tax pensions, and take SWR at 3.5% (still a conservative withdrawal rate) from $800,000 retirement funds gets you $28k income (and it is adjusted each year for inflation rate). So you have $121k before taxes annual income. You mention working part-time till age 62 and bring in maybe $18k? Gives you total pre-tax of $139000. Effective tax rate of 25% puts you right close to $105000 after tax.

And you still have $200,000 in a reserve emergency fund for extraordinary medical, nursing home, world tours etc. You are not touching the $200k for living expense, but that pot IS gaining some income you could drain off---at 4% that pot gives you another $8k to add to your yearly income. Putting you at pretax $147000 annual. If you don't get after tax of over $105,000 out of that---LOOK FOR A NEW TAX ADVISOR!

And you still have SS to kick in at 62-66 (or maybe as late as 70?)

I still think the "worst" problem you and DW will have is figuring out how in the heck the pair of you can maximize total SS benefits over your expected lifetimes. And one of you starting at 62 while the other delays to 66 (or later) may be as good a strategy as any, given the unknowns none of us can figure out ahead of time.

You never mentioned your house---mortage? free and clear? Regardless, if you can't pay a mortgage from $147000 annual, something is rotten in Denmark.

I repeat, start the countdown to ER 2008!!! You are cleared for takeoff.

 

[escoff]

Thanks to all for replies.