Travis Bickle
Dryer sheet aficionado
- Joined
- Aug 10, 2017
- Messages
- 30
Hi All -
So - a couple of years have passed since my last post in this forum, and I once again want to share current thinking with this group who have been so super helpful in the past. The advice here has been essential to help me understand planning for retirement and I'm excited that (maybe) the time is close at hand.
My original two posts were:
"55 and Close To Ready" - August 2017
"56 and Still Close to Ready" - May 2018
Updated situation:
Personal Situation:
59 years old
Current Income about $175K + 30% target bonus (bonus can vary between 10 and 40% depending on company performance) ~$227k
Assoc. Director in a Large Pharma Company
Two daughters 21 and 22 years old - One Senior in final semester and one junior
Still very tired of the corporate grind and ready to go now. Vacations are never, ever long enough and the last half of every one is dread about having to go back to work. Sometimes I suffer anxiety and mild depression, but nothing too serious yet and I control via meditation and medication. (This is a change from 2018 where I was controlling with meditation alone - a therapist is the one who guided me towards a better solution using combo of CBT and low dose of Prozac, and I am much better off mentally than a year ago.)
I am still considered a high performer, but that's not always a good thing because lots of stuff comes my way. I've been able to avoid the types of work I really hate and what I am doing now is semi-satisfying, but I still am very tired of "the bosses" and the ever shifting corporate BS that can make it hard to just do your work.
Have plenty of hobbies and interests outside of work. Not worried at all about not working. I'm looking forward to exercising more, losing some weight, doing some volunteering, and maybe do some part time consulting work (I know I will be in demand) or another part time gig of some sort.
I have requested from HR the retirement packet with a leave date of May 31, but nothing is final until I sign and return it and so my final decision is still not made fully.
Current Savings/Retirement Income:
$1.92M in Fidelity 401k - maintaining about 30%bonds/70%Stock Index Funds.
I can receive a pension in one of two ways:
- Lump sum upon retirement of $1.65M
OR
- Annuity of $79k/year (with %66 survivor annuity for wife if/when I croak before her)
~$50k cash
$25k in ROTH IRA (over the income limit to add more)
Have stock options for 3 years worth about $70k total at time of retirement plus a final year bonus of ~$40k
If I retire, I am eligible to withdrawal from 401k before 59 1/2 without penalty.
Social Security projection is $66k/year (me + spousal) if I delay taking it until age 70.
My wife has a part time job at the school making ~$11k/year and is enjoying it. I expect she may eventually get more hours the longer she works there.
Current Expenses:
I have been tracking expenses in detail since early 2019, and it's tracking at about $120k (not including college expenses for daughters) with about $85k of that being "Essential Expenses" and the rest "Discretionary" (such as vacations, dining out, entertainment, etc.)
College expenses have been covered by 529's and bonuses and we are done with oldest daughter. One more year to go with youngest daughter, but we expect to have enough for her from current 529's balance plus about $20k from this spring's bonus for last year.
Oldest daughter accepted to PHD programs that are fully funded plus stipend. Younger daughter is also excellent student who will likely look at grad school. We have promised both that we will not cover any grad school tuitions, but will help them with living expenses as needed as well as wedding costs when/if that happens. My planning is ~$30k per year for next four years for living expenses and then $20k each for weddings farther out.
Expenses include $20k/year in mortgage that will be paid off in 2025
In retirement, I will be eligible for retiree HC benefits, which will make my health insurance about $3-$4k more than what I pay now - total of around $8-$9k/year for a family of 4. It's a good plan with low deductibles and preventive care covered 100%.
So - given all that I'm putting our expected expenses at $135k (plus the short term $30k per year for daughters) until mortgage is done, and then dropping by $21k. All expenses projected to grow 1.5% yearly.
Results of Various Calculators
Firecalc - %100 success with spending at $135k + the "one time" expenses for supporting daughters + drop in spending when mortgage goes
i-ORP - "Discretionary Income" (i.e. after taxes) spending of $117k per year with 4% growth per year.
Fidelity Retirement Planning says "Good to Go" with May 31 retirement date with "significantly below average" market performance. Same answer whether I take lump sum or annuity (they recently stopped giving the numeric ratings, but before they did I was at "134")
I also use a self-built excel spreadsheet to project spending vs. balances and am showing my money decreasing until SS kicks in, where it starts growing and ending at over $4M at age 100. I use a flat 4.2% growth (I got the 4.2% from reading something put out by John Bogle about what he thinks the future holds for growth). My model assumes an annual spending growth of 1.5% per year. (I recognize that this is less than projected inflation, but I figure our spending should slowly drop over time as well - especially considering that right now we are supporting a family of 4 adults).
Some questions for your consideration:
1 - Any concerns about readiness?
2 - Should I be concerned about the party pooper results from i-ORP? I was a little taken aback that that model has my spending lower than target for the first 4 years. Looking closer, their model was using a 4% growth in spending throughout the plan, whereas in firecalc and the Fidelity tool I was able to actually model in the higher front end spending, with lower spending later when daughters are off the books and mortgage is paid.
3 - I know from previous threads I would be better off with more after-tax cash on hand. However, we've mostly been focused on knocking out the college tuitions and making the 401k catch-up contributions. We've now stopped funding the 529's and are plowing that money into cash holdings at a rate of about $800 per month. The stock options and final prorated bonus I would receive at retirement should also help us build up the cash holdings after I retire. Now that I'm in my retirement year, should I stop funding the 401k once I make a final decision to definitely go?
4 - When I do retire and start taking withdrawals, would it make sense for me to take withdrawals up to the top of the 22% tax bracket ($175k for MFJ I believe) and do a Roth conversion on that to lower future taxes when RMD's kick in? I still need to learn about the Roth conversions, so if anyone can point to a good learning source for that it would be really helpful.
Thanks for any additional thoughts you might have and thanks once again to all the posters on these forums. An outstanding resource.
- Travis Bickle
So - a couple of years have passed since my last post in this forum, and I once again want to share current thinking with this group who have been so super helpful in the past. The advice here has been essential to help me understand planning for retirement and I'm excited that (maybe) the time is close at hand.
My original two posts were:
"55 and Close To Ready" - August 2017
"56 and Still Close to Ready" - May 2018
Updated situation:
Personal Situation:
59 years old
Current Income about $175K + 30% target bonus (bonus can vary between 10 and 40% depending on company performance) ~$227k
Assoc. Director in a Large Pharma Company
Two daughters 21 and 22 years old - One Senior in final semester and one junior
Still very tired of the corporate grind and ready to go now. Vacations are never, ever long enough and the last half of every one is dread about having to go back to work. Sometimes I suffer anxiety and mild depression, but nothing too serious yet and I control via meditation and medication. (This is a change from 2018 where I was controlling with meditation alone - a therapist is the one who guided me towards a better solution using combo of CBT and low dose of Prozac, and I am much better off mentally than a year ago.)
I am still considered a high performer, but that's not always a good thing because lots of stuff comes my way. I've been able to avoid the types of work I really hate and what I am doing now is semi-satisfying, but I still am very tired of "the bosses" and the ever shifting corporate BS that can make it hard to just do your work.
Have plenty of hobbies and interests outside of work. Not worried at all about not working. I'm looking forward to exercising more, losing some weight, doing some volunteering, and maybe do some part time consulting work (I know I will be in demand) or another part time gig of some sort.
I have requested from HR the retirement packet with a leave date of May 31, but nothing is final until I sign and return it and so my final decision is still not made fully.
Current Savings/Retirement Income:
$1.92M in Fidelity 401k - maintaining about 30%bonds/70%Stock Index Funds.
I can receive a pension in one of two ways:
- Lump sum upon retirement of $1.65M
OR
- Annuity of $79k/year (with %66 survivor annuity for wife if/when I croak before her)
~$50k cash
$25k in ROTH IRA (over the income limit to add more)
Have stock options for 3 years worth about $70k total at time of retirement plus a final year bonus of ~$40k
If I retire, I am eligible to withdrawal from 401k before 59 1/2 without penalty.
Social Security projection is $66k/year (me + spousal) if I delay taking it until age 70.
My wife has a part time job at the school making ~$11k/year and is enjoying it. I expect she may eventually get more hours the longer she works there.
Current Expenses:
I have been tracking expenses in detail since early 2019, and it's tracking at about $120k (not including college expenses for daughters) with about $85k of that being "Essential Expenses" and the rest "Discretionary" (such as vacations, dining out, entertainment, etc.)
College expenses have been covered by 529's and bonuses and we are done with oldest daughter. One more year to go with youngest daughter, but we expect to have enough for her from current 529's balance plus about $20k from this spring's bonus for last year.
Oldest daughter accepted to PHD programs that are fully funded plus stipend. Younger daughter is also excellent student who will likely look at grad school. We have promised both that we will not cover any grad school tuitions, but will help them with living expenses as needed as well as wedding costs when/if that happens. My planning is ~$30k per year for next four years for living expenses and then $20k each for weddings farther out.
Expenses include $20k/year in mortgage that will be paid off in 2025
In retirement, I will be eligible for retiree HC benefits, which will make my health insurance about $3-$4k more than what I pay now - total of around $8-$9k/year for a family of 4. It's a good plan with low deductibles and preventive care covered 100%.
So - given all that I'm putting our expected expenses at $135k (plus the short term $30k per year for daughters) until mortgage is done, and then dropping by $21k. All expenses projected to grow 1.5% yearly.
Results of Various Calculators
Firecalc - %100 success with spending at $135k + the "one time" expenses for supporting daughters + drop in spending when mortgage goes
i-ORP - "Discretionary Income" (i.e. after taxes) spending of $117k per year with 4% growth per year.
Fidelity Retirement Planning says "Good to Go" with May 31 retirement date with "significantly below average" market performance. Same answer whether I take lump sum or annuity (they recently stopped giving the numeric ratings, but before they did I was at "134")
I also use a self-built excel spreadsheet to project spending vs. balances and am showing my money decreasing until SS kicks in, where it starts growing and ending at over $4M at age 100. I use a flat 4.2% growth (I got the 4.2% from reading something put out by John Bogle about what he thinks the future holds for growth). My model assumes an annual spending growth of 1.5% per year. (I recognize that this is less than projected inflation, but I figure our spending should slowly drop over time as well - especially considering that right now we are supporting a family of 4 adults).
Some questions for your consideration:
1 - Any concerns about readiness?
2 - Should I be concerned about the party pooper results from i-ORP? I was a little taken aback that that model has my spending lower than target for the first 4 years. Looking closer, their model was using a 4% growth in spending throughout the plan, whereas in firecalc and the Fidelity tool I was able to actually model in the higher front end spending, with lower spending later when daughters are off the books and mortgage is paid.
3 - I know from previous threads I would be better off with more after-tax cash on hand. However, we've mostly been focused on knocking out the college tuitions and making the 401k catch-up contributions. We've now stopped funding the 529's and are plowing that money into cash holdings at a rate of about $800 per month. The stock options and final prorated bonus I would receive at retirement should also help us build up the cash holdings after I retire. Now that I'm in my retirement year, should I stop funding the 401k once I make a final decision to definitely go?
4 - When I do retire and start taking withdrawals, would it make sense for me to take withdrawals up to the top of the 22% tax bracket ($175k for MFJ I believe) and do a Roth conversion on that to lower future taxes when RMD's kick in? I still need to learn about the Roth conversions, so if anyone can point to a good learning source for that it would be really helpful.
Thanks for any additional thoughts you might have and thanks once again to all the posters on these forums. An outstanding resource.
- Travis Bickle
