Hoping to be ready when the ax falls...one year later

[CountingDown2014]

I introduced myself a year ago (http://www.early-retirement.org/forums/f26/hoping-to-be-ready-when-the-ax-falls-69983.html) and just wanted to give an update on our progress. Luckily I was able to avoid the ax until December but it still hasn't completely fallen since I am now working as a consultant (essentially same amount of work for less pay but at least I have more flexibility to work from home so on a balance it's still worth it while it lasts which probably won't be beyond mid-year). Shortly after my prior posting, my DH was offered his old job with a new contractor (of course for less money) and he plans on working at least as long as I am. Between market gains and new savings, our investment portfolio increased by about $350k in the last year and our plan is to now have an investment portfolio closer to $3MM after we sell our current residence and move to our second home (assuming the stock market doesn't have a major slide). During the past year (due in large part to this forum), we moved $110k into Roth IRAs, simplified our portfolio, set up a solo 401k to which I will contribute the max in 2015 and have a much better handle on our expenses. So while our future is still somewhat up in the air in the short-term, I feel a lot more comfortable that we are on the right path to early retirement and want to thank this forum for all of the guidance it has provided.

 

[2B]

It sounds like you have it all together. Good work.

From past experiences on this forum, don't expect a lot of sympathy if you start saying you can't live off a portfolio of $3MM. I relaize you are still both in your mid-50s but a 4% SWR would still give you $120k/yr. You could be more aggressive with either a variable withdrawal plan or using the Bernicke model in FireCalc. I'm personally planning to use a variable withdrawal method but I have several small pensions that will help bolster my SS in 7 years.

Have you checked out your SS benefits? You still have some years to go before they kick in but I personally think it should be in the plan.

 

[Katiek]

Congrats! Sounds like you're making all the right moves and will be positioned to handle whatever comes.

 

[kimcdougc]

Congrats! Your plan sound good.

 

[mystang52]

"....(assuming the stock market doesn't have a major slide)."

If the only thing that might upset your planned ER-apple cart is a market slide, why not reallocate your holdings so you can weather such a storm? Regardless, it sure looks like you're in good shape.

 

[heeyy_joe]

The stock market will have a slide, make sure you have a 10% cash cushion.

 

[MBAustin]

Nice to get the update and to know that in some small way the good folks here have been helpful.

If you haven't already had to find your own health insurance, this might be a good time to investigate what's available if you may need to go that direction later this year.

 

[CountingDown2014]

Thanks everyone for your responses.

2B – You won't hear me saying we can't live off of a $3MM portfolio! I certainly feel very fortunate that things have worked out to the point where this is where we are at, as a few years back I wouldn't have thought this would have been possible. I do like the appeal of a variable withdrawal method and think we should be able to keep our essential annual spending low enough to get us through any down years although, like some others on this forum, it might be more difficult for us to spend more in the up years. And yes, we've checked into our SS benefits and they will provide some additional cushion to our plan.

Mystang52 and heeyy_joe – Given the length of our anticipated retirement, we feel we have to keep a certain amount of our portfolio in stock as a hedge against inflation. We do currently have around 3x our annual expenses in taxable investments we can liquidate if we need to (Ally bank, PenFed CDs and I-Bonds) so we should be OK for a few years. I think we will be in a bit of a quandry as to where to put the proceeds of the sale of our primary residence when that occurs as well as any savings this year after we fund our 401ks and IRAs, but that's a question for another day.

MBAustin – Yes, I've looked into health insurance costs and the plan is to switch plans at the end of the year. I have told DH he's going to have to get fired if he wants to leave his job before then!

Thanks again everyone.