48 and semi-retiring with ~800K

G

got2retire2025

Dryer sheet wannabe
Joined
Jul 27, 2024
Messages
15
Location
Midwest
Hello from the flyover city of O’Fallon MO (St. Louis area)

I'm 48ys and my wife is 58ys and we have no kids.

Our age gap will make the following scenario unique, but I'm hopeful there is someone out there that was, or currently in, a similar situation and can share their thoughts on our plan.

Financials: 1.1M in total assets (~800K invested/cash)
Home: $300K paid off
Current 401K: $463K. (20% ROTH,80% traditional.) Current strategy is 90% stocks.
Wife’s IRA: $100K
My old IRA: $60K
Shared Brokerage Account: $100K
HSA: $23K (all but $2k is invested)
Cash: 30K

Future Income:
Frozen company pension: $1,533 a month when I turn 65 or $45K lump sum if rolled into an IRA (I included the $45K my total assets calculation)
My Social Security at 65: est $2,228 (this will drop since I will semi-retire so early)
Wife’s Social Security at 65: est $1,400

We are in our 2nd year of tracking our expenses and we know we can flex between $35K-$45K a year.
Essential spend: $35K a year ($2,916 a month)
$10K in flexible spending (vacations, camping, other controllable spend)

Next years health care plan would be with the ACA. The estimates I see seem very reasonable ($0-$88 a month) based on our estimated future taxable take home.

I would like to work part time as an usher for our local MLB team (dream job ~80 games a year) + a couple days a week at a Lowes or Home Depot. I am planning for ~$28K a year between the two. My wife makes $15K a year with her dog walking and boarding business (cash, not included in ACA calcs)
Between the two of us, the $43K should cover our expenses so I don’t think we will have more then a 2% withdrawal rate anytime in the near future.

FICalc shows 0 cycles failed, for a success rate of 100.0% when I enter in my above scenario.

We don’t foresee any major lifestyle changes in the future. This year we purchased (cash) a "new to us" travel trailer so we plan on camping with our dogs more in early-retirement.

Is there anyone out there like us? Are there any blind spots in our plan? Any major red flags or hard STOP warnings?

Really looking forward to anyones thoughts.

Thank you,
Dreaming to semi-retire in 2025.
 
We certainly have members who live on your proposed spend level. If you and DW are happy with that, then "why not?" Just be certain you and DW are on the same page as far as spending goes.
 
Koolau said:
We certainly have members who live on your proposed spend level. If you and DW are happy with that, then "why not?" Just be certain you and DW are on the same page as far as spending goes.
Click to expand...
The good news is, my wife is the one keeping track of the budget and spending so we are both on the same page for sure.

Thank you for the quick response.
 
Your numbers are very close to mine so I'm interested in the responses. I live in a different state so ACA expenses seem a lot higher for us. I intend to ER between September and March of next year.
 
Everything looks in order especially since you looked into the ACA. Nice part time job for you and you probably don't work too much once the game gets going.
 
A couple of nitpick questions

Does your 45k in spending include income taxes?

If so, did you use the post 2025 law for income tax estimation? The current TCJA income tax rates are due to sunset under exiting law.

-gauss
 
Looks a little lean to me. You only have $130K in the brokerage account and cash to tap, before you are 59 1/2 and can tap retirement accounts. In the event of a downturn in the economy, I bet some of you or your wife side jobs disappear.
 
OP, by keeping your expenses under control, you are in good shape to FIRE. If I were you, I would keep the pension instead of cashing it out now. Assuming pension + SS will be enough to cover your family expenses after 65 (17 years from now), your current investment will only need to last for 17 years instead of the usual 30->40 years.
From a pure math perspective, you are at expenses/investment = ~40K/800K = 5%, but you are in better shape than some one with a 200K/4M ratio (also 5%) because some side gigs can easier cover your expenses in bad investment years.
What is a bit more risky for you is health care expenses beyond the ACA premium. Out of pocket could be 6K->10K in bad years. But if you are both in good health, then that is much less of a concern.
 
Obviously expenses have to include all medical, dental, and vision. You may have some out of pocket beyond the ACA premiums. Medicare may be more expensive than ACA.

I would guess that your taxes would be very low, but you have to include them.

Did you include one off major expenses like a car, hvac, roof, ...?

Seems like you can make it work since you both are willing to do some work to make ends meet.
 
I just did the math and it looks like you have $731K accumulated if you don't count the lump sum pension. As long as you and your wife continue with your part-time gig until you both draw on SS, you should do fine.
 
RetiredHappy said:
Definitely take the $1,533 per month in pension when you turn 65. After 3 years, you would come up ahead of taking the lump sum.
Click to expand...

If the option is to take the $45k today, I don't know that waiting 17 years for the $1500/month is necessarily the correct choice. The breakeven would be more than 3 years if the lump sum is today, because the $45k will grow for 17 years. If we figure a 7% annual growth rate, the $45k would grow to $142k. And the breakeven is about 8 years. That would be to age 73. This assumes no further growth during withdrawal - but, of course there will be continued growth. So, as $1533 is withdrawn monthly, from the $142,000, the $142,000 is still growing by 7% a year...or about $9800 in year one. So, the net is about negative $8000/year initially. Might still be a good choice to wait 17 years for the pension, but not for certain, especially since it's frozen.

I plugged the numbers into a calculator for how long the money would last starting with $142,000, $1533 monthly withdrawals, and continued growth of 7%. The result was 12 years and one month. So that would be to age 77 for breakeven. Again, not clear which is the better alternative in my view.

OP - please clarify - is your $45k lump sum if you take it now?
 
Last edited:
I did the same calculations on the pension but took different assumptions since you plan on covering expenses until 65. I assumed 7% growth and got the same $142k and change. Then I did a quick 4% WR at age 65, divided it by 12 and got $474/month. Even an immediateannuities.com deferred joint gets you better than that at ~$615/mo. The pension at $1,533/mo is close to 2.8X of the average at age 65. That is a no-brainer. Even assuming a 10% annual return (SP500 average annual) gets you less than half of the pension monthly. Frankly, that pension @65 number seems rather out of line to me.
 
CRLLS said:
I did the same calculations on the pension but took different assumptions since you plan on covering expenses until 65. I assumed 7% growth and got the same $142k and change. Then I did a quick 4% WR at age 65, divided it by 12 and got $474/month. Even an immediateannuities.com deferred joint gets you better than that at ~$615/mo. The pension at $1,533/mo is close to 2.8X of the average at age 65. That is a no-brainer. Even assuming a 10% annual return (SP500 average annual) gets you less than half of the pension monthly. Frankly, that pension @65 number seems rather out of line to me.
Click to expand...
I'm not understanding why you would apply a 4% WR? It's not an apples to apples comparison. If we kept the 7% growth assumption, the value would continue increasing 3% a year.

Why wouldn't you make your starting point a 7% WR? The 7% growth is still going to continue, and so with this you're going to get $9940/year or $823/month, and the $142,000 balance will remain all along. This puts you in a better position than what immediateannuities is giving you, because you are getting more than $615/month AND you (your heirs) still have the $142,000 when you pass.

I believe my approach of taking the same $1533 monthly withdrawal, and then figuring how long the money will last, is the appropriate comparison to the pension. You can calculate the breakeven, and then decide if it makes sense.

Anyhow, it's what I would do.
 
gauss said:
A couple of nitpick questions

Does your 45k in spending include income taxes?

If so, did you use the post 2025 law for income tax estimation? The current TCJA income tax rates are due to sunset under exiting law.

-gauss
Click to expand...

I have planned in ~ $4000 in estimated income tax using the 15% tax bracket on my estimated part time jobs. My wife is paid in cash so I excluded hers.

I did not know about the TCJA income tax rates sunsetting so I will have do some research on this. Thanks for the details!
 
Al18 said:
Looks a little lean to me. You only have $130K in the brokerage account and cash to tap, before you are 59 1/2 and can tap retirement accounts. In the event of a downturn in the economy, I bet some of you or your wife side jobs disappear.
Click to expand...

I appreciate your views. Do you feel it’s less lean if in my plan we can also tap into my wife’s 100k IRA next year when she turns 59.5. So next year I would be able to leverage 230k if needed.

Thoughts?
 
I guess we are one of the closer ones to your situation. We retired in 2015 with about $1.3m and aside from some couple of years where I was trading stocks, we kept our income in the $30k/yr range, supplemented by cash from selling a home. Today we have another home we built and $1.6m in the market, plus some mountain land, so feeling *ok*. I still keep our income at about $29k a year at age 54/55 in order to pay zero federal tax and get all the freebie scraps you rich folks throw down here :)

We set up a 72t to keep that $29k income level and I guess that could be an option for you? It was super easy but it looks like your spouse will be able to tap funds in less than 2 years so not sure if it would be something you are interested in.

Healthcare costs other than dental and vision are near zero. Actually they are kind of negative as our plan gives us hundreds of dollars to spend on certain categories (utilities for one) if we complete some health surveys and get flu shots. It is weird to be paid to get healthcare but whatever.

Because of the no kids, I say go for it. It really is never too early to retire, look at Shannen Doherty.
 
ut2sua said:
OP, by keeping your expenses under control, you are in good shape to FIRE. If I were you, I would keep the pension instead of cashing it out now. Assuming pension + SS will be enough to cover your family expenses after 65 (17 years from now), your current investment will only need to last for 17 years instead of the usual 30->40 years.
From a pure math perspective, you are at expenses/investment = ~40K/800K = 5%, but you are in better shape than some one with a 200K/4M ratio (also 5%) because some side gigs can easier cover your expenses in bad investment years.
What is a bit more risky for you is health care expenses beyond the ACA premium. Out of pocket could be 6K->10K in bad years. But if you are both in good health, then that is much less of a concern.
Click to expand...


Thank you taking the time to review and showing some of your calculation's.

Thank you for highlighting the ACA concerns. We are both in good health. I work remotely 100% and am looking forward to a healthier lifestyle in semi retirement, getting out of the house more. My wife walks dogs , so is healthy. So far in life we have only gone to the doctor for yearly exams and minor maintenance. However, I would expect this to change as we get older. Is your estimated out of pocket based on normal doctors visits, routine maintenance, or if something catastrophic happened, like surgery, cancer etc?
My wife has shown more concern for this. Since she has 10 years on me. She is 10 years closer to Medicare than I am. Not she sure if that’s a plus or not.

Thoughts?
 
imjustawarrior said:
Obviously expenses have to include all medical, dental, and vision. You may have some out of pocket beyond the ACA premiums. Medicare may be more expensive than ACA.

I would guess that your taxes would be very low, but you have to include them.

Did you include one off major expenses like a car, hvac, roof, ...?

Seems like you can make it work since you both are willing to do some work to make ends meet.
Click to expand...

Thank you for some great points!
I did NOT budget in additional costs for out of pocket expenses above ACA. Similar topic was brought up in another post and I’m asking more details on additional expenses. This might be a blind spot for us.

I do I have just over $20K in an HSA that I can leverage, but would prefer to keep it invested so it grows. Not sure how long this HSA money will last if we are tapping into a lot our few years.

In regards to your great points about house maintenance in the last 3 years, we replaced all windows, skylights, remodeled our bathroom, remodeled our kitchen, we will be replacing our HVAC this month, and getting our backyard patio concrete poured this fall so we have a nice semi retirement area to put some rocking chairs ; ) .. our roof is ~ 8 years old.

The only thing to mention is that our automobiles are not even close to being new. Which might be one of the reasons why we can even contemplate retirement. We don’t buy newer vehicles.

I have concerned about the truck I pull our travel trailer with. At some point I might have to replace that within the next five years so that’s additional expense that might be a a surprise cost.

Thanks for you thoughtful insight… and yes, I believe we both are eager to make this work!
 
RetiredHappy said:
I just did the math and it looks like you have $731K accumulated if you don't count the lump sum pension. As long as you and your wife continue with your part-time gig until you both draw on SS, you should do fine.
Click to expand...

The good news is neither of us really want to retire just to sit more. So we plan on having active part time jobs/ income with flexibility so we can enjoy more life together.

With me working 100% remote for so many years , the last thing I want to do is sit at home more. I am excited to have some small time jobs that gets me out and about more, and get paid to watch some baseball. : )

Thanks for your thoughts.
 
groesbeck said:
Your numbers are very close to mine so I'm interested in the responses. I live in a different state so ACA expenses seem a lot higher for us. I intend to ER between September and March of next year.
Click to expand...

I’m glad there’s others out there like me. I hope we both learn a lot. : )
 
njhowie said:
If the option is to take the $45k today, I don't know that waiting 17 years for the $1500/month is necessarily the correct choice. The breakeven would be more than 3 years if the lump sum is today, because the $45k will grow for 17 years. If we figure a 7% annual growth rate, the $45k would grow to $142k. And the breakeven is about 8 years. That would be to age 73. This assumes no further growth during withdrawal - but, of course there will be continued growth. So, as $1533 is withdrawn monthly, from the $142,000, the $142,000 is still growing by 7% a year...or about $9800 in year one. So, the net is about negative $8000/year initially. Might still be a good choice to wait 17 years for the pension, but not for certain, especially since it's frozen.

I plugged the numbers into a calculator for how long the money would last starting with $142,000, $1533 monthly withdrawals, and continued growth of 7%. The result was 12 years and one month. So that would be to age 77 for breakeven. Again, not clear which is the better alternative in my view.

OP - please clarify - is your $45k lump sum if you take it now?
Click to expand...

I am totally geeking out on the pension topic so thank you to everyone for your engagement.. I’m sure there will be more posts. : )

The pension system shows a lump sum ~$45k now.

Is there a way to tell if my pension is protected by the government if my company goes out of business, claims bankruptcy, or is sold to another company?
 
njhowie said:
I'm not understanding why you would apply a 4% WR? It's not an apples to apples comparison. If we kept the 7% growth assumption, the value would continue increasing 3% a year.

Why wouldn't you make your starting point a 7% WR? The 7% growth is still going to continue, and so with this you're going to get $9940/year or $823/month, and the $142,000 balance will remain all along. This puts you in a better position than what immediateannuities is giving you, because you are getting more than $615/month AND you (your heirs) still have the $142,000 when you pass.

I believe my approach of taking the same $1533 monthly withdrawal, and then figuring how long the money will last, is the appropriate comparison to the pension. You can calculate the breakeven, and then decide if it makes sense.

Anyhow, it's what I would do.
Click to expand...
I'm not saying one way is better, just that I took a different way to look at it. I compared the pension amount which runs until death but nothing left for heirs, to the annuity which also runs until death with nothing left to heirs, and to Bengen's original 4% SWR most commonly used to evaluate the amount one can withdraw over 30 years without failure, taking him to age 95. FWIW I am using age 100 not 65. Using a 7% withdrawal as a plan does not take into account sequence of returns and variable growth over time. Now if you proposed taking a flexible annual amount that matched the previous year's growth and if it had a loss that year, somehow deposit that same amount into the account, I would think that would be more towards your now-proposed142k for heirs. We take different viewpoints, that's all. The OP needs to look at every option and chose what fits his situation & comfort zone.
 
You must log in or register to reply here.

Similar threads

kirkhaven
Hoping to semi-retire at 56.
2
kirkhaven
kirkhaven
A
Age 48, retiring
pacergal
P
Francissr32082
Semi-retired, retiring next year
Koolau
Koolau
Y
35, just passed $1 million and re-assessing our plan
2
ransil
R
C
Hello! 51, not quite there, career doldrums, etc
Koolau
Koolau

Latest posts

Back
Top Bottom