I am so glad I stumbled along this website while doing research on early retirement. I have already found some very useful information. I would like to share our situation with you and find out what you think. I want to make sure I have not missed anything.
During a period of unemployment 4-5 years ago, I received an opinion from a financial expert that with minor changes, I would not need to return to work. I was a bit concerned and returned to work. We implemented many of the changes in hopes of really being ready when the time was right. We are now living in a less expensive home and are working on paying off our RE loan over the next several years. The balance is about $265,000 at 2.85%. I have a plan penciled out to pay off the loan by the end of 2014. We have no other debt. We did establish a HELOC for any future emergencies.
Over the last 2 years, we have been living with expenses generally as we will during retirement with the exception of several onetime expenses. One of the non-repeating expenses is finishing up some (significant) home improvements and another is the expense for a second home we maintain for DH's w*rk. When DH stops working out of the area, the expenses related to that location will end. DW is going to be 50 this year. He is working for a company that has gone through many layoffs. He is just riding it out for severance or until the rest of our home improvements are done and loan is paid off.
I am 46 and plan to w*rk at least until June 2014. A couple of things are happening that make it worth the time-but that could change.
I have been using Quicken since the early '90's. I know what we are spending our money on. By looking at our last 10 years (adjusted for inflation and removing several not repeating expenses), our living expenses are between $70,000 and 80,000. I also have a zero based budget that confirms that the $80,000 is very comfortable. I have estimated taxes and health care and included both in our expense figure. Taxable income is projected to be below 400% of FPL for two.
We have a rental unit in our home. At 85% occupancy, it brings in $14,000 per year. All related expenses are all ready in our living expenses and it provides a nice tax benefit. We will count on the income to offset some of our discretionary spending.
Current investment holdings: $1.65M, 80% stock and 20% bonds. $1.085M is qualified/retirement and about $565,000 is non-qualified/taxed. I am projecting we will between $1.5 and $1.6M at the end of 2014 (with loan paid and home improvements completed).
As for modeling, Quicken has us making it to over 100 years old. FIRECalc has us at 100% (retiring now) at various years from 30 to 60 years in retirement. Models include 80% of SS projections.
Several concerns:
Health care costs: I sure don't want to pull the plug now and find out 2014 just brings a bunch of messes for us. Current health insurance is through my employer so no concerns with DH separation.
Income from investments: Many of our investments are generating regular income. The income is close to what we need, however, if the value does not grow or does not return what I am planning, we will need to withdraw from the principle. I need to get a better handle on withdrawals. Withdrawal rate rounds nearly to 4% at the high end of our estimated expenses. The low end is at 3.4%.
Section 72 t: With such a high portion of our investments in qualified plans, we will need to make SEPPs. I really need to make sure I have the plan all worked out so there are no surprises. The requirement minimum distribution (RMD) method will provide enough income without the risk that comes along with the other two methods. Without 72 t, we would be years from retirement.
Generally, I feel like we are in good shape. I should note, it is ME that is 100% responsible for our finances and I really don't have anyone to compare notes with. I am looking forward to your questions/concerns to help me develop some confidence in my plan.
During a period of unemployment 4-5 years ago, I received an opinion from a financial expert that with minor changes, I would not need to return to work. I was a bit concerned and returned to work. We implemented many of the changes in hopes of really being ready when the time was right. We are now living in a less expensive home and are working on paying off our RE loan over the next several years. The balance is about $265,000 at 2.85%. I have a plan penciled out to pay off the loan by the end of 2014. We have no other debt. We did establish a HELOC for any future emergencies.
Over the last 2 years, we have been living with expenses generally as we will during retirement with the exception of several onetime expenses. One of the non-repeating expenses is finishing up some (significant) home improvements and another is the expense for a second home we maintain for DH's w*rk. When DH stops working out of the area, the expenses related to that location will end. DW is going to be 50 this year. He is working for a company that has gone through many layoffs. He is just riding it out for severance or until the rest of our home improvements are done and loan is paid off.
I am 46 and plan to w*rk at least until June 2014. A couple of things are happening that make it worth the time-but that could change.
I have been using Quicken since the early '90's. I know what we are spending our money on. By looking at our last 10 years (adjusted for inflation and removing several not repeating expenses), our living expenses are between $70,000 and 80,000. I also have a zero based budget that confirms that the $80,000 is very comfortable. I have estimated taxes and health care and included both in our expense figure. Taxable income is projected to be below 400% of FPL for two.
We have a rental unit in our home. At 85% occupancy, it brings in $14,000 per year. All related expenses are all ready in our living expenses and it provides a nice tax benefit. We will count on the income to offset some of our discretionary spending.
Current investment holdings: $1.65M, 80% stock and 20% bonds. $1.085M is qualified/retirement and about $565,000 is non-qualified/taxed. I am projecting we will between $1.5 and $1.6M at the end of 2014 (with loan paid and home improvements completed).
As for modeling, Quicken has us making it to over 100 years old. FIRECalc has us at 100% (retiring now) at various years from 30 to 60 years in retirement. Models include 80% of SS projections.
Several concerns:
Health care costs: I sure don't want to pull the plug now and find out 2014 just brings a bunch of messes for us. Current health insurance is through my employer so no concerns with DH separation.
Income from investments: Many of our investments are generating regular income. The income is close to what we need, however, if the value does not grow or does not return what I am planning, we will need to withdraw from the principle. I need to get a better handle on withdrawals. Withdrawal rate rounds nearly to 4% at the high end of our estimated expenses. The low end is at 3.4%.
Section 72 t: With such a high portion of our investments in qualified plans, we will need to make SEPPs. I really need to make sure I have the plan all worked out so there are no surprises. The requirement minimum distribution (RMD) method will provide enough income without the risk that comes along with the other two methods. Without 72 t, we would be years from retirement.
Generally, I feel like we are in good shape. I should note, it is ME that is 100% responsible for our finances and I really don't have anyone to compare notes with. I am looking forward to your questions/concerns to help me develop some confidence in my plan.
