FIRE away! Resigned/Retired today (3/21/2025) - Numbers listed

[RamStride]

Well, today was my last day at work. I am one of those who accepted the Fork in the Road-Deferred Resignation Program with the retirement option. So, at 56/6, I am nervously and cautiously in FIRE mode. My 'official' retirement date, which is when my pension will kick in is actually not be until 12/30/25 since I will be on admin leave until that day when I will be 57/3. But for all intent and purposes it is retirement. Or, let's call it a hybrid retirement. DW is retiring in May 2025 at 59.

I am nervous because with the lower pension and in my opinion, only an OK net worth, I need to cautious and make sure our nest egg lasts a long time.

How does this look to you? Here is where we I stand:

• Age at ER: Him: 57/3, Her: 59/0
• Debt free
• No mortgage
• No car payments
• Expecting to invest ~$100k-120k in house remodel right after ER using existing cash

From the 12 E-R 'Can I Retire' thread.

1. Expenses: Actual numbers per my Excel budget planning:
   1. Pre-Retirement: ~$5700/mo, $68400/yr (non-discretionary and discretionary)
   2. Post-Retirement: ~$5300/mo, $63600/yr. (adjusted lower to due to deficit as a result of lower pension income)
2. Health care insurance premiums included with expenses. Not included are maximum deductible or out-of-pocket expenses.
3. Kids are adults and independent. They will get whatever is left when we checkout.
4. No major lifestyle changes planned other than traveling when the time and money is right, replacement of cars when needed, and house repairs/maintenance. I do fly private small airplanes as a hobby. Currently in a club with but would not mind getting into an aircraft partnership with a few people at a cost of ~$10k/yr and ~$40k initial investment.
5. ER income (adjusting using 2% COLA, 15% effective tax):
   
   • Year 2026 to 2028: ~$6600 mo./~$79000 yr. (gross), [~$4400 mo./~$53000 yr. (net)]
     • Pension: ~$3800/mo. (gross)
     • Pension supplement: between ~$1800/mo. (gross) (stops at age 62 in 2030) (No COLA)
     • State pension (DW): ~$850/mo. (gross)
   • Year 2028 to 2030: ~$7900 mo./~95000 yr. (gross) ~$5500 mo./~$65500 yr. (net)
     • If DW takes SS at 62: ~$1300/mo.
   • Year 2031+: ~$10500/mo./~126000 yr. (gross) ~$7600 mo./~$91000 yr. (net)
     • Lose pension supplement
     • If I take SS from at 62: ~$2500/mo.
   • Extra income: Part-time job as motorcycle instructor and possibly flight instructor (if certification completed in 2025) will be extra money to also fund any retirement needs or BTD items.
6. Pension is ~90+% accurate. COLA taken into consideration at a modest 2%
7. SS numbers obtained from SSA.
8. All taxes estimated using 15% effective tax. Estimating will stay below the 22% tax bracket.
9. Nest egg as the time of posting:
   • TSP(401k): ~$1.45mil (~1.26mil traditional, ~$197k Roth)
   • Stocks: ~$250k
   • MMA: ~$93k (4.2% yield)
   • Emergency Fund: ~$20k (4.2% yield)
   • Checking/Savings: ~$20k (0.01% APY)
   • House: $550k
10. Will we die before 85? No idea. Currently, health is good and parents are in their late 70’s.
11. FIRECalc: If all input values are correct, which I am not sure of, FIRECalc returns a 100% probability of success. The copy of Right Capital return similar results. Using the ‘Investigate’ tab in FIRECalc for a 95% probability of success the spending level can increase to over $147k. This will be 100% more than the currently estimated budgeted expenses!
12. If the unexpected comes up this will need more attention. The worst scenario will be if I check out. My pension income will drop 75% for DW. She will receive a one-time lump sum work life insurance payment of $25k and a one-time lump sum term-life insurance payment of $550k if I check out before summer 2033. Taxes will be painful. I estimate DW will require ~5% annual distribution from traditional and Roth to be in ok condition and more than 5% for better quality of life.

Miscellaneous:

1. With these numbers I am expecting an income deficit of ~$700/mo., $8400/yr. The plan is to cover any shortages using interest/dividend income, profits from investment/options profits (if realized) and the part-time instructor jobs (motorcycle and flight).

Is this enough to justify my E-R decision?

 

[SecretlyFI]

Although you mention planning for a 15% effective tax rate, your gross vs net income amounts appear to be more like 30% or more apart. So perhaps your net amounts should be higher?

I would try to plan for and include estimated medical/dental out of pocket amounts in your expenses. I would also examine whether it’s too optimistic to plan for expenses dropping from pre-retirement to post-retirement - especially if the airplane club idea comes to fruition. You mention this is planned due to a deficit/lower pension income, but have you identified what cuts you want to make?

Anyway, with a nest egg of about $1.7m (after house remodel) and with an initial gross income of $79k, it seems you can easily cover expenses at your pre-retirement level and even higher, using even just a very safe 1% withdrawal rate from your nest egg. And this improves even more as you start SS in the next few years. Congratulations!

 

[Exchme]

You said that if you pass away your pension "will drop 75%", meaning she will get only 25% of your amount? or did you mean to say that it will drop TO 75% of your pension amount?

You mentioned that DW's withdrawal rate would be 5% if you pass early, but I don't follow the math. Whatever your continuing pension would be is added to her pension, her SS. If you pass while the life insurance is in force, the $550K will last a goodly while. If you pass after the insurance lapses in 2033, that's 8 years, your nest egg could be much larger since you will have hardly touched it.

The best mitigation if you are worried that you might pass right after the insurance lapses may be for you to delay claiming SS, your $2500 benefit at 62 will grow to almost $3600 if you pass before your FRA and she waits to claim survivor benefits until 66 and 8 months and if you make it to age 70, it's over $4400.

Anyway, I think you are in good shape.

 

[DJRR]

Yeah, not following your gross to net. Married filing jointly you end up in the 12% Federal bracket. Do you have crazy state taxes. My total taxes project to just over 10% for State and Federal combined after standard deduction.

Anyhow, if your expenses are really $5,300 I think you probably have 2x the money you need if you ran it through fire calc which is why it says you can double your spending.

 

[audreyh1]

Congratulations!

 

[engineernerd]

I didn't follow all your math (how do you come up with the Year 2031+ amount $10,500/mo?), but you seem in good shape to me, too.

I second the recommendation to wait to claim your SS, for DW's sake if you die after the term life insurance ends but before age 70.

 

[Koolau]

IMHO you are close enough (probably in great shape) that if you or DW found yourselves a bit short, you could make some minor changes and be just fine.

Having been a private pilot and partial aircraft owner, I can attest that changing hobbies is likely all it would take to keep you in the black. Having said that, my guess is you will do just fine. Best luck.

 

[HarveyS]

Quote: "Expenses: Actual numbers per my Excel budget planning:

1. Pre-Retirement: ~$5700/mo, $68400/yr (non-discretionary and discretionary)
2. Post-Retirement: ~$5300/mo, $63600/yr. (adjusted lower to due to deficit as a result of lower pension income)"

Does "Pre-Retirement" reflect your actual average annual expenses for the last 3 years? Not budget, but actual. In my experience, the actuals tell the spending story.

 

[Dtail]

Yeah will the pension drop 75% for DW or to 75% of current? It appears you are good to go either way.

 

[CO-guy]

Congrats! Sounds like you're all set!

 

[TickTock]

I"m not sure that I completely follow all the numbers in your #5, but with estimated expenses of $5.3 / month plus taxes, pensions of $4.65 / month (not including the supplement) and $1.7 million portfolio you are good to go.

 

[RamStride]

Although you mention planning for a 15% effective tax rate, your gross vs net income amounts appear to be more like 30% or more apart. So perhaps your net amounts should be higher?

I would try to plan for and include estimated medical/dental out of pocket amounts in your expenses. I would also examine whether it’s too optimistic to plan for expenses dropping from pre-retirement to post-retirement - especially if the airplane club idea comes to fruition. You mention this is planned due to a deficit/lower pension income, but have you identified what cuts you want to make?

Anyway, with a nest egg of about $1.7m (after house remodel) and with an initial gross income of $79k, it seems you can easily cover expenses at your pre-retirement level and even higher, using even just a very safe 1% withdrawal rate from your nest egg. And this improves even more as you start SS in the next few years. Congratulations!

Thanks for the feedback! Yes, the percentage will appear higher than 15%. Good observation. That is because I have all normal deductions included and other items like vacation fund, 2 car fund, home remodel fund, parent assistance deduction, my cash fund, DW cash fund and few other smaller items.

I've been thinking about estimating out of pocket medical expenses. I will have to search online what's a good estimate. Knock on wood, we have not had big medical expenses in years. But life says that will not be the case going forward.

I am double-guessing the aircraft purchase. I am in a club right now that has 4 airplanes. The cost is about 50%-70% of aircraft purchasing option or about 5k-8k depending how may $100 hamburgers I eat.

If the dividends, stocks and part-time jobs are not enough to cover the deficit and offer a little more I can cut on the 'discretionary' items I mentioned above.

 

[RamStride]

You said that if you pass away your pension "will drop 75%", meaning she will get only 25% of your amount? or did you mean to say that it will drop TO 75% of your pension amount?

You mentioned that DW's withdrawal rate would be 5% if you pass early, but I don't follow the math. Whatever your continuing pension would be is added to her pension, her SS. If you pass while the life insurance is in force, the $550K will last a goodly while. If you pass after the insurance lapses in 2033, that's 8 years, your nest egg could be much larger since you will have hardly touched it.

The best mitigation if you are worried that you might pass right after the insurance lapses may be for you to delay claiming SS, your $2500 benefit at 62 will grow to almost $3600 if you pass before your FRA and she waits to claim survivor benefits until 66 and 8 months and if you make it to age 70, it's over $4400.

Anyway, I think you are in good shape.

For my federal FERS retirement pension, we selected the 25% survivorship payout option. The thought there, right or wrong, it that if our nest egg is good for two people right now, it will be enough for one person. Plus, like you mention before 2033, there is the $500k and after 2033 DW will get my higher SS. Thanks for the the vote of confidence in the numbers.

 

[RamStride]

Maybe this will help with following the numbers. Let me know if you notice any errors with my reasoning. After the comments here I checked the formulas and found an error that was giving me a higher deficit.

Not included in the income is the extra cash I receive from selling stock options. Last year I made about $10k. This year I am up to $13k but will have to wait until the end of the year to claim it since I have 9 months to lose the realized gains that I have to date.

 

[RamStride]

Yeah will the pension drop 75% for DW or to 75% of current? It appears you are good to go either way.

Drop to 25%. It is the Federal FERS 25% survivorship option.

 

[Dtail]

Drop to 25%. It is the Federal FERS 25% survivorship option.

Okay, the numbers still work.

 

[DuluthGA]

congratulations!

 

[sdtech]

Sharing airplane ownership is by far the financially best way to go. Emotionally I like being the solo owner and to know exactly how the plane was treated. (Would really like to blame someone else however when one of the tires showed a flat spot from braking too soon)

 

[RamStride]

I like being the solo owner... (Would really like to blame someone else however when one of the tires showed a flat spot...)

With you 100%

 

[Alex The Great]

Congratulations! Your financial situation looks OK to me. The only issue I can see is that you're a bit high on pre-tax money (401K). Tax bill may hit you later. Much later, as for your age RMD may start by late 70s only.
I also retired at 56, with invested funds similar to yours but without any pension. But I'm single.

 

[38Chevy454]

I agree with the rest, your numbers look good to go. Having house paid off, cars paid off, no other debt, and a decent pension income gives you a low withdrawal rate. You do have a good amount of savings, and that will continue to grow. Your bigger problem may become the tax torpedo from RMDs.

Enjoy retirement and the rest of the year getting paid to stay away from work.

 

[skyking1]

Congrats from a fellow retiree and pilot.

 

[Sunset]

Drop to 25%. It is the Federal FERS 25% survivorship option.

If I read correctly, your SS is the higher one, so I think you should wait until age 70 to collect your SS, because if you both live long, you win. If you die first, you still win as the much higher SS will compensate for the dramatic drop in pension for wife.
Remember, because you die, expenses only drop ~20% not 50%.

 

[Koolau]

Sharing airplane ownership is by far the financially best way to go. Emotionally I like being the solo owner and to know exactly how the plane was treated. (Would really like to blame someone else however when one of the tires showed a flat spot from braking too soon)

One of my partners always seemed to put the aircraft away needing the tanks filled (he did leave a note to fill it at his expense). Heh, heh, I always obliged and filled those tanks to the rim!

 

[RetiredHappy]

Note that SS numbers assume that you both will continue to work. You need to use the SS calculator to show income contribution as 0 after you retire to get actual numbers.