need a plan

[fire_dreamer]

Hi I need some advice...
I am 40 and my hubby is 42 with no kids.  Our current dream is to retire in 2 years. I thought we were doing pretty good with our plan and now I am not so sure.  I am worried that we may not have enough to last out our lives. Especially after reading all the other posts. I am pretty deflated right now.  We plan on working part time for a few years and am figuring on making about 15-20 K year.  We also put about $80/K in savings per year so we will have another 160/k to add to the figures below.  What do you think? Is our plan feasible?  what should we be focusing on to achieve this?

here is our current info...
combined income is $140/K
house $300/K (free and clear)
401k / IRA's  $200/K
taxable accts   $530/K

We both will get a pension but not very much (probably about $15/k combined)
but we will not have health care .

 

[REWahoo]

F_D, welcome to the forum.

My first question would be have you run your numbers and assumptions through FIRECalc? And did you get numbers you are reasonably comfortable with?

A key element you didn't mention is your spending requirements today and as they might change over time (medical insurance, for example). Without that information, I don't think anyone can give you really useful advice on you plan.

 

[fire_dreamer]

REWahoo

Our current expenses are about $27K per year not including the cost of health care because we currently get that thru our employers. I did run the numbers through fire calc and if I figured it right we would be at 100% with 35K per year withdrawal. It seems like we would be ok but it doesn't give us much breathing room for any unforseen circumstances.

 

[fire_dreamer]

I forgot to add that I our expenses should remain the same over time except for the health care.

 

[Cool Dood]

fire_dreamer, bear in mind that FireCalc's assumptions already include some breathing room (especially if you're pulling up a 100% rate). Also, in most cases people can be a little flexible -- there are a lot of ways you can adjust to unforseen circumstances, and fear of that isn't necessarily a reason to keep working. There are also unforseen circumstances that will affect you if you choose to keep working instead.

All in all you look in decent shape to me -- I wouldn't get too worried if I were you -- and you should feel comfortable about your own decision, it doesn't really matter if it would make someone else on this board uncomfortable. It's not their retirement and lives!

 

[REWahoo]

With $27K current expenses and $35K SWR from FIRECalc, I would agree that based on those numbers alone you don't have much wiggle room when you add in healthcare costs.

That said, you indicated you are willing to work part-time for a "few years", and that should provide additonal financial breathing room and maybe a solution to your health care insurance as some part time jobs do offer coverage. Have you read ESRBob's book, Work Less, Live More? That will give you other ways to look at your options in seeking FIRE.

With no kids, low expenses and the willingness to work part-time, your plan doesn't look unreasonable to me. As is often said here, if it doesn't work you can allways go back to full-time work, right?

 

[fire_dreamer]

cool dood thanks you are absolutely right about the unforseen circumstances of continuing to work in the rat race! thanks for the encouraging thoughts!

REWahoo! - I haven't read the book but I will definitely check it out. Ugg the thought of leaving the workforce and then having to go back to full time just gives me the chills! maybe we could just keep up with the part time work to subsidize our healthcare costs... I thank you for all your help I appreciate it ! I am thinking that this dream we have had can actually come true especially now that I have found this forum full of information and advice from people who have done it!

 

[Caroline]

F_D:

Your positiion is much the same as mine -- don't let the millionaires on this board scare you! ;-)

As for having to go back to work if it doesn't work out -- I find that chilling too!

However, I got an interesting call the other day from a friend who'd said he would "live under a bridge" before he'd return to our company / industry. You guessed it, he's looking for a job! He says that he was really burned out but that a few years of rest and of doing something else, he's ready to be employed again. Others on this board have reported the same thing.

This is not to suggest that you PLAN on coming back someday (shudder!) but only that leaving sooner is worth the risk, since coming back may not be as horrible as we now imagine it to be.

Hang in there in the meantime!
caroline

 

[Nords]

He says that he was really burned out but that a few years of rest and of doing something else, he's ready to be employed again.  Others on this board have reported the same thing.

Include me out!

 

[MooreBonds]

I am pretty deflated right now. We plan on working part time for a few years and am figuring on making about 15-20 K year. We also put about $80/K in savings per year so we will have another 160/k to add to the figures below.

here is our current info...
combined income is $140/K
house $300/K (free and clear)
401k / IRA's $200/K
taxable accts $530/K

We both will get a pension but not very much (probably about $15/k combined) but we will not have health care .

If I were you I wouldn't be too discouraged...

If you can save up another $160k (presumably in taxable accounts), it'll give you about $700k to use from age 42 to 65.

You say (in a later post) you indicate you'd have about $35k in withdrawals/year. That is just 5% withdrawal per year from your taxable alone, WITHOUT any SS/pension. Some questions:

1) get a quote from an on-line insurer (such as ehealthinsurance.com or assuranthealth.com) just to see what it would cost for your own health insurance. If in reasonably good health, I'd recommend using a high-deductible policy and an HSA

2) What is your estimated SS benefit based on your current contributions to-date? (i.e. assuming you retire in 2 years and pay no more into the system) You will have to go to the SS webpage and manually input your earnings record.

3) what age can you start receiving your pension? Is it COLAed?

Based on #2 and #3, I'd say that you have a very good chance of making it work out, ESPECIALLY if you plan on working part-time and having an additional $10k-$20k/year in part-time income. Remember: if you work part-time, every $1 is somewhat equivalent to $25 in assets. Obviously, if you don't work part-time forever, then you can't count that as additional funds...however, if you work part-time until the $15k/year pension kicks in, then it can work out perfectly.

--Peter

 

[fire_dreamer]

Thanks Caroline...I have a friend that has been laid off for about a year now and
when she used to work full time she would always dream of not working. Well now she says she can't wait to get back to work. so maybe after a hiatus I too would feel like going back to work. Who knows!


Peter

I have answers to your questions....sorry for the delay I was on vacation!

1. about 200/mth for a high deductible plan. we are both healthy now but I do have some family history that may make a lower deductible plan more desirable in the future.

2. SS would be about $23K in todays dollars for both of us and we can't collect until we are 67.

3. we can both start collecting our pensions at 55 with reduced benefits. To get the full amount we would have to wait til 65. I am not sure about the cola adjustments. I can't remember reading about that. I will have to read up on both our plans.

Reading everyones posts makes me that much more determined that we can do this! thanks for your input!

 

[modhatter]

Keep one thing in mind, each year as you grow older, your insurance premium will rise accordingly. Even with a high deductable when you are in your late fifties, early 60's you could be paying $450 to $550 a month EACH for coverage. I am 64 and have a lower cost HMO in Florida. It cost me about $500 a month.

Even with medicare, unless you convert to a HMO, you will be paying $150+ a month each for medi-gap insurance.

One solution, if you opted to quit work intirely would be to retire in Mexico, or Panama etc. You can buy a pretty good policy in those areas for a very reasonable sum. Not for everyone I know, but deffinately a means to retire now without worry.

I would not fret though. People on this board are the "minority". For every one of them with 1 miliion + there are 100 with next to nothing, so you are much more fortunate than most. At least you have choices, and that is what it is all about.

 

[1rose]

I was reading an article earlier on that retirement is going to become a thing of the past for most people. Instead of retirement it will be part time work.

If you are passionate about your work its no problem, but doing something every day that you detest makes life a misery. So my philosophy is never retire even if you are just coaching and helping others to achieve their goals and passing down your wisdom as your prime motivation rather than financial reward. Find your passion, something you'd love to do regardless

 

[Martha]

. . . So my philosophy is never retire

If that is your philosophy, why are you on a retire early forum?

 

[1rose]

Hi
I am very interested in writing some articles about retirement.

 

[Nords]

Hi
I am very interested in writing some articles about retirement. 

Hmmm, so you're planning to keep working by writing about retirement.

I sense a credibility issue here...