poorcarver
Recycles dryer sheets
Hi,
I hope the following is clear and complete without being too long.
I am 65, DW is 59. Both sort of professionals (engineer, programmer). Joint income after taxes, employee insurance costs, 401/403 max contribution, extra pension contribution $116k. I am with a mega-corp, work at home, can work anywhere on earth so long as solid internet connectivity. I neither like or dislike my job. They send money, I send work. It is boring but they do send money. While I have a lot of interests, do not feel constrained. DW commutes, hates the job, her employer and worse for her is bored out of her mind. The idea is for DW to quit at the beginning of 2014 and I go a year later.
We max out the IRA/Roth IRA contribution ($6k each) and save an additional $24k out of the take home.
We have no debt other than mortgage. We refinanced a few years ago 3.1% on 30 years. The idea was to get the required number down to less than rent so that if the whole house of cards we call an economy collapsed we could at least find enough so that we would have shelter. We make a large monthly payment against principal such that assuming things go as planned we will be paid off in seven years. We have approximately $250k equity on a $450k house in a very affluent area. Yes we have the smallest and least valuable home in the neighborhood. Sort of the poor white trash among the investment bankers and lawyers.
Total spending runs $80k. We don't spend on things and don't have a lot of things compared to most. We drive a little car, we wear ordinary clothes, We do spend on experiences, dining out, good scotch, better cigars, hobby interests. We are very careful to not "require" a lot of money but do spend "freely" out of what is left after saving, mortgage and so forth. Required spending runs under $60k. I want to be clear we do not require the extra spending, our feeling is that if we can afford it we do it, if it disappears tomorrow, then we stop.
We have two children who are 26 and 27. Both graduated debt free and are properly launched as contributing members of society. DD is finishing grad school, married and a homeowner, SIL is PhD Chemist employed by huge International Mega-Corp with serious prospects and an amazing salary. DD's profession is well paying, high demand. DS is a 1st LT, Ranger assigned to the 82nd. Both graduated Summa, Phi Beta Kappa from among the highest ranked colleges in the world. Neither is unlikely to boomerang.
I have our expenses for the last ten years in quicken. I have a solid, data driven budget for us in retirement. Annual requirements slide around as we go forward as near term the budget reflects mortgage, estimate for DW's health insurance, and high taxes to cover so much withdrawal from tax advantaged accounts. Then over the years the mortgage drops out, DW is on medicare and the requirements drop, SS kicks in at age 70 for us both, etc. I have modeled the RMD's and the taxes there on (to the degree one can, I just put in a big fudge factor). Spending starts at $120k in 2014 (lots of contingency) and drops in constant dollars to $62k by 2025.
I have run FireCalc, i-orp, RIP (Fidelity), and every other calculator I can find and all are 100% and then some. I have run monte carlo analysis, applied a wild SD to the mean inflation, and ran one scenario of 1983 inflation for 40 years (ok I am crazy). They all work.
I also built an elaborate spreadsheet where I listed expenses, calculated taxes, put in a 25% contingency. Rather than estimate inflation, I held all costs constant and solved for the minimum investment return required to have money left on a 40 year plan. The minimum required was .5%. In other words, so long as investment returns exceed inflation by .5%, we have sufficient to run for 40 years starting in 2014. I understand that this is simplistic as it does not take variation into account. I also modeled one of us dying and removing some income from the mix at various ages. I modeled taking $50k additional a year out for the first four years and it all still works.
Assets listed below. My problem is that I am cynical and paranoid. I am scared that someone or some thing will break the model and at age 75 with no prospect of earning any money at all, my DW and I will be on the street. I do not expect the members of this community to repair my psyche, but some review and flaw finding would be much appreciated.
Our overall AA (tax advantaged funds) is approximately 35% domestic/60% bonds and the rest international. Everything is Vanguard funds, except where noted.
Taxed
tax advantaged intermediate term bond fund $100k
Baron Funds $62k (had it for 20 plus years a reminder of my financial education)
MM $50k
Tax advantaged other than Roth (DW and my 401/403, tIRA's)
Intermediate term Admiral Bond funds $1.2MM
Index 500 and total market funds $700k
Total non-US equity funds $200k
Roth
$150k in Index 500 and International funds. The plan is to never touch this except as a last ditch requirement.
SSN (based on entering our earnings record manually in the SS calculator)
Me $38k, DW $35k (this based on DW quitting in 2014)
Non=Cola Pension $12k
I hope the following is clear and complete without being too long.
I am 65, DW is 59. Both sort of professionals (engineer, programmer). Joint income after taxes, employee insurance costs, 401/403 max contribution, extra pension contribution $116k. I am with a mega-corp, work at home, can work anywhere on earth so long as solid internet connectivity. I neither like or dislike my job. They send money, I send work. It is boring but they do send money. While I have a lot of interests, do not feel constrained. DW commutes, hates the job, her employer and worse for her is bored out of her mind. The idea is for DW to quit at the beginning of 2014 and I go a year later.
We max out the IRA/Roth IRA contribution ($6k each) and save an additional $24k out of the take home.
We have no debt other than mortgage. We refinanced a few years ago 3.1% on 30 years. The idea was to get the required number down to less than rent so that if the whole house of cards we call an economy collapsed we could at least find enough so that we would have shelter. We make a large monthly payment against principal such that assuming things go as planned we will be paid off in seven years. We have approximately $250k equity on a $450k house in a very affluent area. Yes we have the smallest and least valuable home in the neighborhood. Sort of the poor white trash among the investment bankers and lawyers.
Total spending runs $80k. We don't spend on things and don't have a lot of things compared to most. We drive a little car, we wear ordinary clothes, We do spend on experiences, dining out, good scotch, better cigars, hobby interests. We are very careful to not "require" a lot of money but do spend "freely" out of what is left after saving, mortgage and so forth. Required spending runs under $60k. I want to be clear we do not require the extra spending, our feeling is that if we can afford it we do it, if it disappears tomorrow, then we stop.
We have two children who are 26 and 27. Both graduated debt free and are properly launched as contributing members of society. DD is finishing grad school, married and a homeowner, SIL is PhD Chemist employed by huge International Mega-Corp with serious prospects and an amazing salary. DD's profession is well paying, high demand. DS is a 1st LT, Ranger assigned to the 82nd. Both graduated Summa, Phi Beta Kappa from among the highest ranked colleges in the world. Neither is unlikely to boomerang.
I have our expenses for the last ten years in quicken. I have a solid, data driven budget for us in retirement. Annual requirements slide around as we go forward as near term the budget reflects mortgage, estimate for DW's health insurance, and high taxes to cover so much withdrawal from tax advantaged accounts. Then over the years the mortgage drops out, DW is on medicare and the requirements drop, SS kicks in at age 70 for us both, etc. I have modeled the RMD's and the taxes there on (to the degree one can, I just put in a big fudge factor). Spending starts at $120k in 2014 (lots of contingency) and drops in constant dollars to $62k by 2025.
I have run FireCalc, i-orp, RIP (Fidelity), and every other calculator I can find and all are 100% and then some. I have run monte carlo analysis, applied a wild SD to the mean inflation, and ran one scenario of 1983 inflation for 40 years (ok I am crazy). They all work.
I also built an elaborate spreadsheet where I listed expenses, calculated taxes, put in a 25% contingency. Rather than estimate inflation, I held all costs constant and solved for the minimum investment return required to have money left on a 40 year plan. The minimum required was .5%. In other words, so long as investment returns exceed inflation by .5%, we have sufficient to run for 40 years starting in 2014. I understand that this is simplistic as it does not take variation into account. I also modeled one of us dying and removing some income from the mix at various ages. I modeled taking $50k additional a year out for the first four years and it all still works.
Assets listed below. My problem is that I am cynical and paranoid. I am scared that someone or some thing will break the model and at age 75 with no prospect of earning any money at all, my DW and I will be on the street. I do not expect the members of this community to repair my psyche, but some review and flaw finding would be much appreciated.
Our overall AA (tax advantaged funds) is approximately 35% domestic/60% bonds and the rest international. Everything is Vanguard funds, except where noted.
Taxed
tax advantaged intermediate term bond fund $100k
Baron Funds $62k (had it for 20 plus years a reminder of my financial education)
MM $50k
Tax advantaged other than Roth (DW and my 401/403, tIRA's)
Intermediate term Admiral Bond funds $1.2MM
Index 500 and total market funds $700k
Total non-US equity funds $200k
Roth
$150k in Index 500 and International funds. The plan is to never touch this except as a last ditch requirement.
SSN (based on entering our earnings record manually in the SS calculator)
Me $38k, DW $35k (this based on DW quitting in 2014)
Non=Cola Pension $12k