Snapshot of where we are at 52

[chemEguy]

I posted my corporate BS rant a little while back and really appreciated all the great replies, so thanks for all of those. I thought I’d share some hard data as we mull another 2ish years of working.

Age, both 52
Kids, both in college
Cash and cash equivalents, 150K
Investment accounts, 2 million
Tax advantaged accounts, 2.9 million
Yearly spend, excluding college, 165K
Yearly savings, maxed 401K only as we direct new cash to college costs
College, 40K a year per kid (in the thick of it)
Looming expenses: new deck, front door replacement
SS at age 62, 50K a year combined total if nothing changes

I expect the picture will gain a lot of clarity over the next two years as the kids move through college.

As to the yearly expenses, we want to maintain that spending level. It affords us a comfortable lifestyle where we don’t worry too much about doing what we want.

 

[Koolau]

With kids out of college in a few years, it looks like you are in good shape with your FIRE plan. Most of your discretionary expenses can be delayed if need be. Please keep us posted and best luck with your plan.

 

[pacergal]

Quick glance, you look fine. Congratulations!
Run Firecalc, answer the "Can I Retire?" questions in the ER FAQs.
The time will go quickly.

 

[HawkeyeNFO]

Your numbers are in many ways quite similar to mine, biggest difference being 3 kids, 1 of which is still in HS. My last day of work is this month. I'd say go ahead and take the leap of faith. With around $5M in the bank, 4% would give you $200k to live off of, so you're GTG (good to go).

 

[Exchme]

Are your tax advantaged accounts mostly or all tax deferred? If tax deferred, that is a lot for your age and given the long runway before RMDs, you could end up in some really high tax brackets.

I would be a bit proactive and put your bonds preferentially into tax deferred and make a plan for when you are going to do some heavy lifting on Roth Conversions.

Note that taking SS benefits at 62 would get in the way of your low tax space that you will really want for Roth Conversions. Generally it's better in your situation to defer SS to make room for the conversions.

 

[chemEguy]

I’d have to check the exact makeup. We are fairly high income and lost the ability to put money into Roth a long time ago. Maxing out those contributions was needed to lower our tax bill.

 

[disneysteve]

165K in spending from a $5 million portfolio is just fine. Does that 165K include healthcare expenses in retirement and taxes? If so, it sounds like you're all set.

 

[ERNERD]

investingdad,

I've been following your posts on bogleheads for about a decade now. You have made outstanding progress. IIRC, you went from $1MM at 39 in 2012 to $5MM at 52? Impressive growth. You should not be afraid to ER at this point. The college expenses will be gone soon and you have a very good expense/investable assets ratio (withdrawal rate).

 

[chemEguy]

investingdad,

I've been following your posts on bogleheads for about a decade now. You have made outstanding progress. IIRC, you went from $1MM at 39 in 2012 to $5MM at 52? Impressive growth. You should not be afraid to ER at this point. The college expenses will be gone soon and you have a very good expense/investable assets ratio (withdrawal rate).

Yep, that’s about right.

In our younger years we funneled as much as we possibly could into retirement funds and investments and kept spending low. I detailed a lot of that over at BH when I first started seeking out the experience of others that could provide input. The BH community really helped to reinforce the strategy that we were following.

Gradually the lean years tapered as our salaries grew and the portfolio snowballed. When we began to really think about FIRE, I found even more good insight here.

The collective wisdom of both BH and this site is phenomenal. I also appreciate the subtle differences that allow for tangential conversations I have here vs BH. I think there’s a lot of crossover members!

In my view, these two sites are the benchmark for tapping into a wealth of knowledge when it comes to saving, investing, planning, strategizing, and FIREing.

 

[pb4uski]

I don't understand what you're waiting for. No need to wait two years. You have plenty now. I suggest that you run FIRECalc and use the last option on the Investigate tab to solve for safe spending. I think you will find that your safe spending is more than $165k a year by a wide margin, enough that you will feel comfortable retiring anytime.

You may want to check out opensocialsecurity.com to assess your optimal SS claiming strategy. If you are healthy, delaying SS is like buying a COLA life annuity from the SSA and it is very hard to find COLA annuities as you may know.

If you want, you can "build your own SS" for the period of delay from 62 to 70 using TIPS. If you will get $50k combined at 62, then you'll probably get $83k a year combined at age 70 (($50k/75%)*(1+((70-67)*8%))=$83k). So you forgo $50k a year for 8 years ($400k total) and get $33k more a year for life.

Based on current TIPS pricing, at 62 you could buy a TIPS ladder that would provide you with $83k a year plus inflation for 8 years that would be a earmark within your portfolio for ~$613k... so from 62 to 70 you would get the maturing TIPS and after the 8 years, you would get $83k a year of SS, also inflation adjusted.

 

[chemEguy]

I don't understand what you're waiting for. No need to wait two years. You have plenty now. I suggest that you run FIRECalc and use the last option on the Investigate tab to solve for safe spending. I think you will find that your safe spending is more than $165k a year by a wide margin, enough that you will feel comfortable retiring anytime.

You may want to check out opensocialsecurity.com to assess your optimal SS claiming strategy. If you are healthy, delaying SS is like buying a COLA life annuity from the SSA and it is very hard to find COLA annuities as you may know.

If you want, you can "build your own SS" for the period of delay from 62 to 70 using TIPS. If you will get $50k combined at 62, then you'll probably get $83k a year combined at age 70 (($50k/75%)*(1+((70-67)*8%))=$83k). So you forgo $50k a year for 8 years ($400k total) and get $33k more a year for life.

Based on current TIPS pricing, at 62 you could buy a TIPS ladder that would provide you with $83k a year plus inflation for 8 years that would be a earmark within your portfolio for ~$613k... so from 62 to 70 you would get the maturing TIPS and after the 8 years, you would get $83k a year of SS, also inflation adjusted.

I think the short answer is we’re working to cover the lump sum costs of our kids’ college. In two years, we’re 75% through it. That puts us at 54. My wife will be much more comfortable at that point (I hope). She earns the larger salary between us and once those big paychecks are gone, they’re gone.

 

[pb4uski]

^^^ I understand, it is a big life change and a very nervous time, but at the same time, I think you are all set.

 

[Car-Guy]

In your situation, even though I think you are set, I'd probably hang in until the kids are done with college, unless the job is too much to deal with. That is unless the kids want to make a career out of going to school. My DD wanted to get her Masters, but I told her that's BS... Or I mean, a BS was all I was going to pay for.

 

[chemEguy]

In your situation, even though I think you are set, I'd probably hang in until the kids are done with college, unless the job is too much to deal with. That is unless the kids want to make a career out of going to school. My DD wanted to get her Masters, but I told her that's BS... Or I mean, a BS was all I was going to pay for.

This is our thinking as well. Or at least until the oldest graduates. Double college costs this year and next. It’s the big outlay I’ve been anticipating since they were little. I think the deck replacement probably needs to happen in there also.

In my head, I’m thinking end of calendar year 2027.

 

[Fermion]

$5 million and worried about a deck? Is it a really really big deck? $5 million generates $210,000 a year just sitting in a money market account.

 

[chemEguy]

$5 million and worried about a deck? Is it a really really big deck? $5 million generates $210,000 a year just sitting in a money market account.

Well, we didn’t get to this point by living above our means, so…yeah…

 

[Fermion]

Well, we didn’t get to this point by living above our means, so…yeah.

Understood. Consider DIY deck? Make those college kids earn their way a bit during the summer?

 

[chemEguy]

Understood. Consider DIY deck? Make those college kids earn their way a bit during the summer?

Beyond my ability and not something I’d want to tackle. This time we will use composite deck materials rather than wood. The cedar was nice and we got 15+ years out of it, but this time it’s going to be composite for lower maintenance.

 

[Fermion]

Beyond my ability and not something I’d want to tackle. This time we will use composite deck materials rather than wood. The cedar was nice and we got 15+ years out of it, but this time it’s going to be composite for lower maintenance.

Excellent choice. On our old house which was on a river, glorious view, we built (ourselves) a cedar planked deck that was 70 feet long and 16 feet wide. It looked great when stained but was a nightmare to sand and refinish every few years. Our new house we went composite and it is so easy to maintain. It is actually pretty fun building a deck but if you don't have the tools or skills or just have better things to do, maybe not so much. Good choice though on composite.

 

[Cassius King]

Nothing to add to what has already been said. Just wanted to say excellent job at saving and having these sized accounts at your age. Enjoy!

 

[Koolau]

Nothing to add to what has already been said. Just wanted to say excellent job at saving and having these sized accounts at your age. Enjoy!

Agree. Very stellar numbers for your age. I 2nd your idea to wait for kids to exit college if you can stand it that long. If not, you can always manage with those figures. Best of luck to you and the family.

 

[chemEguy]

Nothing to add to what has already been said. Just wanted to say excellent job at saving and having these sized accounts at your age. Enjoy!

Thanks. My wife and I had decent salaries that have certainly helped. But I largely credit the boglehead investing approach, living below our means even when tempting not to (especially in our 30s and definitely when making house buying decisions), patience, and some good luck (good health, no hardships, etc).

 

[chemEguy]

Agree. Very stellar numbers for your age. I 2nd your idea to wait for kids to exit college if you can stand it that long. If not, you can always manage with those figures. Best of luck to you and the family.

I at least want us to stay on until the oldest is done in 2 years. That clears 75% of college costs.

 

[imjustawarrior]

Does your $165k/yr include taxes, health insurance, large purchases (cars, roof, hvac, weddings, ...)? Expenses in retirement have to include everything that leaves your possession.

I think you would be fine spending $200k/yr, so you should be fine.

 

[chemEguy]

Does your $165k/yr include taxes, health insurance, large purchases (cars, roof, hvac, weddings, ...)? Expenses in retirement have to include everything that leaves your possession.

I think you would be fine spending $200k/yr, so you should be fine.

The 165K is what is spent per year on expenses. So naturally we have to cover tax paid on gains and withdrawals.