Suggestions for MikeL retirement plan

[mikeL]

I posted this in the "Hi" section but figure it belongs here. I've updated it.

I was divorced a few years ago. I still have something left. I am now 47 and remarried. My wife is Thai and we both want to move to Thailand to retire. I would like to go at age 50.

Here in the USA:
I will be selling my house. It is now worth 350K-100K mort=250K
My 401K - 285K
My IRA’s -34K
Cash- 80K
Saving 18K/year in my 401K and adding 4K in my Roth IRA

The earliest I can get my pension is when I turn 55. At the greatly reduced rate of 50% I will get 650.00/month –No COLA
Then SS at 62 the SS Calculator said 1326.00/month

In Thailand:
I will need to buy a house 70K-100K after living their for 2-3 years
And a car 30K when i arrive
I will need to buy Health insurance for approx 3K/year.
I need between 24K-36K/year.
What do you think? Can I do it?

I am trying to educate myself how to plan for my retirement. Suggestions on anything appreciated.
Thanks
Mikel

 

[2B]

I suggest you go to FIRECalc (see bottom of page) and run your numbers. I eyeballed it and I don't think you will make it with your numbers. At age 50 you would need to deplete assets to bridge until your pension and SS.

 

[Patrick]

I will be selling my house. It is now worth 350K-100K mort=250K

I am trying to educate myself how to plan for my retirement. Suggestions on anything appreciated.
Thanks
Mikel

I suggest you consider selling your house asap and renting. Housing values will probably continue to drop for the next couple years as more foreclosures hit the market and many "prime" ARM mortgages reset and the owners realize they cannot afford them anymore.

 

[mikeL]

I suggest you go to FIRECalc (see bottom of page) and run your numbers. I eyeballed it and I don't think you will make it with your numbers. At age 50 you would need to deplete assets to bridge until your pension and SS.

I ran the numbers and they look good ( what did you see?) I just don't know if i can trust them.

Because you indicated a future retirement date (2011), the withdrawals won't start until that year. Your contributions will continue until then. The tested period is 3 years of preretirement plus 37 years of retirement, or 40 years.
FIRECalc looked at the 97 possible 40 year periods in the available data, starting with a portfolio of $649,000 and spending your specified amounts each year thereafter.
Here is how your portfolio would have fared in each of the 97 cycles. The lowest and highest portfolio balance throughout your retirement was $87,892 to $9,683,171, with an average of $2,475,070. (Note: values are in terms of the dollars as of the beginning of the retirement period for each cycle.)
For our purposes, failure means the portfolio was depleted before the end of the 40 years. FIRECalc found that 0 cycles failed, for a success rate of 100.0%.

 

[2B]

mikeL,

I defer to your FIRECalc run. I didn't run the program. I just looked at your numbers and thought it looked a little tight. Who am I to question the actual FIRECalc run?

How good is FIRECalc? IMHO, it's among the best, if not the best, of the retirement calculators. Unfortunately, it is not perfect. It uses actual inflation data and market returns since the 1870s to predect your financial success in the future. I'm sure you've heard "past results do not guarantee future performance" somewhere before. My opinion is that it is a reasonable approximation of likely outcomes.

There are 2 key risks. One is that FIRECalc is too optimistic. There you have to have a plan in case market performance is much below its historical average. How can you cut expenses?

The other risk is that FIRECalc is too pessimistic. After some great years of stock performance, when can you start living a little better so you don't end up with millions in your estate after you die.

When estimating expenses, make sure you realize you will be paying taxes on your income. FIRECalc just does cash flow. Taxes come out of the annual expenses you plug in.

Good luck. With a 100% FIRECalc result, you're probably in pretty good shape. Did you see what your "maximum spending" would be at 95% success? That is probably a good number to know.