Thoughts on if we are prepared

[jdnd9091]

I just posted about a dream trip, but this is more about my concern on if we have prepared enough. The goal is to retire in April 2025, but might hang around until November if I get too concerned about finances. Here is where we stand as of April.

• 1.4 million in 401K. Almost all into equities. We should not have to touch this until we start taking SS at 67. DW will be 65 at the time.
• 800k in a deferred comp package that will pay us about 150k a year until we collect SS. Return is 10% as of now. Prime +1%.
• Should have another 500k in investments once we downsize our house in the next 6 months. House will be paid off. Wouldn't mind putting this into a CD or something with a fixed return
• I should max out on SS which should be around 5k or more a month at 67.
• If I push retirement until November 2025 it will add about 250k in additional investment income. This is due to RSU's and bonus that pay out in November 2025. I prefer to retire in April because I'm an Executive in a very high stress job and have been doing it for 35 years. Kind of worn out on the BS.

My concern is the goal is to live on about 120k a year, Right now we spend about 50-70k a year traveling, but plan on pulling way back after we retire (with the exception of our dream trip I posted about. We might even buy a house by Hilton Head (350-500k) and spend a lot of time down there in the Winter. We love to drive, so will probably spend a lot of time driving around the Country, and maybe even to Alaska. We have taken a lot of lifetime trips with our kids and grandkids, and don't feel the need to keep doing this. Maybe one trip every other year that would cost 20-25k. The wife an I also go to Hawaii once a year for about 10k.

Any input would be appreciated.

 

[mrfeh]

FIRECalc: A different kind of retirement calculator

firecalc.com

 

[Closet_Gamer]

Ex the Def Comp package, $250k will be about a 10% bump to you retirement assets. I’d plan on sticking for that.

Also, make sure that $500k from the downsizing materializes and is locked in. It’s a major assumption.

 

[latexman]

I should max out on SS which should be around 5k or more a month at 67.

A little off. “In 2024, the maximum amount someone can receive in Social Security retirement benefits is $3,822 per month if they retire at 67. Estimates of the 2025 COLA is 2.5%, so $3,917 per month.

To get $5k/month you’ll have to wait until about 70.

 

[MBAustin]

If you are willing to be flexible about discretionary items such as travel when things like unexpected major expenses or an extended market downturn occur, then I think you are fine. But as suggested, running scenarios through a retirement calculator or two is important. Also this close to retirement in either scenario, I would take a hard look at asset allocation - almost all equities in your investments seems a bit high to me.

 

[RetiredHappy]

I would stick around until Nov 2025 to collect the $250K. 7 months = $250K, suck it up. It's worth it.

Instead of buying a vacation home in Hilton Head, buy resale timeshare for next to nothing. I travel 3 months a year with timeshare, Hilton Head, Palm Desert, Hawaii, anywhere that I want and I normally book 2BR to have more space and option to invite others. My maintenance fees is about $15K a year, and it is much cheaper than owning a home and maintenance costs. That $350K-$500K will continue to grow and generate income for you. I also don't think you have room in your savings to afford that second home in Hilton Head. $1.4M + $500K does not leave room for a second home. To learn more about timesharing, go to tugbbs.com. We are a friendly group there and share everything there is to know about timesharing, i.e. satisfying that champagne taste bud with beer budget.

As someone said above, SS age 67 will not get you max of $5K, unless you are including your wife's SS in the number.

 

[HarveyS]

"I would stick around until Nov 2025 to collect the $250K. 7 months = $250K, suck it up. It's worth it."
I say, no thanks. No matter when you leave, you will be leaving money on the table.
Your goal is to live on $120k/year. What have you spent each year in the last 5 years? Don't forget health insurance and income taxes. Is your goal realistic in light of this data?

 

[Unpaintedhuffhines]

I left with 6 months to go until they had a layoff... would have paid me about $150K. I'm glad I didn't stay. If I'd stayed 3-1/2 more years, I could have had all my RSUs vest according to schedule. I haven't done the math on that on the recent stock price, but it would have been a few million for sure.

Thrilled with my decision to leave.

As mrfeh suggests, Firecalc is a great tool.

Living on $10K/month will be very tough if you're accustomed to spending $50K-$70K in travel. Your real question is: can you live on that?

If you're worn out, leave!

 

[Gumby]

Go to the "Early Retirement FAQs" sub-forum and read the second thread "Some Important Questions to Answer ...."

 

[jdnd9091]

Ex the Def Comp package, $250k will be about a 10% bump to you retirement assets. I’d plan on sticking for that.

Also, make sure that $500k from the downsizing materializes and is locked in. It’s a major assumption.

Yeah I know that is a big chunk to walk away from for 7 months work, but I kind of look at it as I'm on borrowed time already. The Bladder Cancer concerns me because it has already come back once, and the Open Heart surgery is no guarantee either. My plan is to decide about 30-60 days out, because after that I can walk when I want. The 500k is a conservative number, and could be better. Thanks for your feedback.

 

[jdnd9091]

A little off. “In 2024, the maximum amount someone can receive in Social Security retirement benefits is $3,822 per month if they retire at 67. Estimates of the 2025 COLA is 2.5%, so $3,917 per month.

To get $5k/month you’ll have to wait until about 70.

That figure was including my DW. I plan on having a call with SS soon to get the actual numbers. I won't be collecting until 2030. Isn't the $3822 for an individual?

 

[RetiredHappy]

Yeah I know that is a big chunk to walk away from for 7 months work, but I kind of look at it as I'm on borrowed time already. The Bladder Cancer concerns me because it has already come back once, and the Open Heart surgery is no guarantee either. My plan is to decide about 30-60 days out, because after that I can walk when I want. The 500k is a conservative number, and could be better. Thanks for your feedback.

I didn't read about your health issues before. It makes sense to stop work ASAP to get away from the stress and enjoy your retirement.

 

[jdnd9091]

I would stick around until Nov 2025 to collect the $250K. 7 months = $250K, suck it up. It's worth it.

Instead of buying a vacation home in Hilton Head, buy resale timeshare for next to nothing. I travel 3 months a year with timeshare, Hilton Head, Palm Desert, Hawaii, anywhere that I want and I normally book 2BR to have more space and option to invite others. My maintenance fees is about $15K a year, and it is much cheaper than owning a home and maintenance costs. That $350K-$500K will continue to grow and generate income for you. I also don't think you have room in your savings to afford that second home in Hilton Head. $1.4M + $500K does not leave room for a second home. To learn more about timesharing, go to tugbbs.com. We are a friendly group there and share everything there is to know about timesharing, i.e. satisfying that champagne taste bud with beer budget.

As someone said above, SS age 67 will not get you max of $5K, unless you are including your wife's SS in the number.

Definitely something to consider. The Hilton Head home is a 30% chance of happening as I think there are better ways to go, like the time share you mention. The SS does include my wife. The 250k will be something difficult to walk away from. Thanks for the feedback.

 

[jdnd9091]

Go to the "Early Retirement FAQs" sub-forum and read the second thread "Some Important Questions to Answer ...."

Those were some good questions. Thanks for letting me know.

 

[Surewhitey]

In light of your health, I'd say yesterday. You can adapt to most anything you come up against if needed with so much wiggle room on your travel budget.

 

[Closet_Gamer]

Yeah I know that is a big chunk to walk away from for 7 months work, but I kind of look at it as I'm on borrowed time already. The Bladder Cancer concerns me because it has already come back once, and the Open Heart surgery is no guarantee either. My plan is to decide about 30-60 days out, because after that I can walk when I want. The 500k is a conservative number, and could be better. Thanks for your feedback.

I’m sorry. I missed the part about health concerns. Those are serious considerations.

 

[jdnd9091]

In light of your health, I'd say yesterday. You can adapt to most anything you come up against if needed with so much wiggle room on your travel budget.

I like your thinking. I grew up with very little material, but a whole lot of love. I've lived an extremely blessed life, and actually look forward to living a quieter more stress free life. As long as I have my kids, grandkids and bikes to ride we are very happy.

 

[HI Bill]

...buy resale timeshare for next to nothing. I travel 3 months a year with timeshare, Hilton Head, Palm Desert, Hawaii, anywhere that I want and I normally book 2BR to have more space and option to invite others. My maintenance fees is about $15K a year, and it is much cheaper than owning a home and maintenance costs.

Sorry, but most here would vehemently disagree on buying a timeshare. For $15K a year, you can buy a lot of VRBO or hotel room nights, and not be stuck in one or a few locations. I never understood those who bought timeshares wanting to return every year to the same place. But the main problem besides the fees is the difficulty in selling (hence the ability to sell for 'next to nothing'. $15K a year wouldn't be good when you're unable/not wanting to travel and need the $.

 

[RetiredHappy]

Sorry, but most here would vehemently disagree on buying a timeshare. For $15K a year, you can buy a lot of VRBO or hotel room nights, and not be stuck in one or a few locations. I never understood those who bought timeshares wanting to return every year to the same place. But the main problem besides the fees is the difficulty in selling (hence the ability to sell for 'next to nothing'. $15K a year wouldn't be good when you're unable/not wanting to travel and need the $.

That's what you don't get. I travel everywhere for 3 months, with more than 3000 locations. I don't need to return to the same place everywhere. You need to do a bit of research.

Have you looked at hotel and VRBO prices? Timeshare 2BR is about 1300 sq ft with full kitchen and living room. You easily pay 4 to 5 times more if you try to book with VRBO or a hotel suite.

 

[HI Bill]

Okay, great, you do you, but please don't give anyone on this site advice to buy a timeshare. The web site you shared has a whole section devoted to folks who are desperate to give away their timeshare. Many have health issues and can no longer travel. Many timeshares have no cash value. If you don't use your time share allotment annually, you are wasting money. Hard to get out of the contract. The original sellers don't want them back. That should be the first clue!

 

[RetiredHappy]

Okay, great, you do you, but please don't give anyone on this site advice to buy a timeshare. The web site you shared has a whole section devoted to folks who are desperate to give away their timeshare. Many have health issues and can no longer travel. Many timeshares have no cash value. If you don't use your time share allotment annually, you are wasting money. Hard to get out of the contract. The original sellers don't want them back. That should be the first clue!

[MOD EDIT] You do you and we do us . Most of us who know how to timeshare the right way accumulate more, instead of giving away our timeshare. If you buy a second home, you put down a chunk of money that doesn't grow for you. Then there is the maintenance headache and costs that go with it.

 

[walkinwood]

In addition to Firecalc, I would spend $100 or so a year on Pralana Gold or similar calculator. Enter all your information and see what it predicts. Understand the limitations of these tools too.

A lot of your withdrawals will be taxed as income, but Firecalc only gives you the gross amount you can safely withdraw. A tool like Pralana will help you breakdown your spending by predicting taxes, SS benefits, medicare premiums etc.

Imho, these tools should be used every year and your expenses adjusted to match their predictions. The annual budget may grow and shrink, so be prepared to adjust your discretionary spending and keep your non-discretionary spending from rising too much.

 

[jdnd9091]

Sorry, but most here would vehemently disagree on buying a timeshare. For $15K a year, you can buy a lot of VRBO or hotel room nights, and not be stuck in one or a few locations. I never understood those who bought timeshares wanting to return every year to the same place. But the main problem besides the fees is the difficulty in selling (hence the ability to sell for 'next to nothing'. $15K a year wouldn't be good when you're unable/not wanting to travel and need the $.

In addition to Firecalc, I would spend $100 or so a year on Pralana Gold or similar calculator. Enter all your information and see what it predicts. Understand the limitations of these tools too.

A lot of your withdrawals will be taxed as income, but Firecalc only gives you the gross amount you can safely withdraw. A tool like Pralana will help you breakdown your spending by predicting taxes, SS benefits, medicare premiums etc.

Imho, these tools should be used every year and your expenses adjusted to match their predictions. The annual budget may grow and shrink, so be prepared to adjust your discretionary spending and keep your non-discretionary spending from rising too much.

Great info. Thank you

 

[Koolau]

I would stick around until Nov 2025 to collect the $250K. 7 months = $250K, suck it up. It's worth it.

Instead of buying a vacation home in Hilton Head, buy resale timeshare for next to nothing. I travel 3 months a year with timeshare, Hilton Head, Palm Desert, Hawaii, anywhere that I want and I normally book 2BR to have more space and option to invite others. My maintenance fees is about $15K a year, and it is much cheaper than owning a home and maintenance costs. That $350K-$500K will continue to grow and generate income for you. I also don't think you have room in your savings to afford that second home in Hilton Head. $1.4M + $500K does not leave room for a second home. To learn more about timesharing, go to tugbbs.com. We are a friendly group there and share everything there is to know about timesharing, i.e. satisfying that champagne taste bud with beer budget.

As someone said above, SS age 67 will not get you max of $5K, unless you are including your wife's SS in the number.

Yours is the first claim I've seen of a "good" time share experience. I'm sure they happen, but not to anyone I know who has gone the time share route. Clearly, YMMV.

 

[RetiredHappy]

Yours is the first claim I've seen of a "good" time share experience. I'm sure they happen, but not to anyone I know who has gone the time share route. Clearly, YMMV.

People who understand how to use timeshare get tremendous value. Rule number 1 is not to buy from the developer. All the nightmare that you read and hear about is that people spend way too much to buy from the developer. There is no value even when you amortize the purchase price over the life of keeping it, say, 10 to 15 years.

When I say value, an example is that if I were to go to Marriott and book a 1 week stay in a 2BR at Westin Ka'naapali, it costs me about $10K a week. My cost to stay in the same room and resort for a week is about $1,200 to $1,500. If you do that for 3 months, you can see how much I save. Even if you say, I don't want to cough up top dollars and prefer to stay at a crummier place, it will still cost you $3K to $4K a week. I get to exchange to up to 3000 locations and resorts worldwide, but the strength is in the US. I spend 4 to 6 weeks in the winter in Scottsdale - Westin Kierland, a top resort in a 2BR and/or in Westin/Marriott brand resort in a 2BR in Palm Desert. In the summer, I spend a month or two in coastal California. I just returned home after spending a month in Monterey CA. Next year we are going back to Carlsbad area for a month in the summer.