Update to my 2007 Thread

[mikeL]

RIGHT][/RIGHT]

I was divorced a few years ago. I still have something left. I am now 46 and remarried. My wife is Thai and we both want to move back to Issan Thailand to retire. I would like to go at age 50. I am not sure if I can afford it.
Here in the USA:
I will be selling my house. It is now worth 430K-100K mort=330K
My 401K - 275K
My IRA’s -30K
Cash- 75K
Saving 13K/year in my 401K
The earliest I can get my pension is when I turn 55. At the greatly reduced rate of 50% I will get 700.00/month –No COLA
Then SS at 62..Not sure what amount. I think about 1300.00/month
In Thailand:
I will need to buy a house 70K-100K
And a car 22K
I will need to pay for my own medical or buy insurance.
What do you think? Can I do it?
I am looking for a financial advisor now because I feel like I am unable to project what my future withdrawals can be. Where should my money be invested and what amount can I safely withdraw? What about when my pension and SS kicks in? Will the withdrawal amount change or will I need that extra money because of inflation?
Thanks
mikeL

Things have changed considerably since I originally asked my question in 2007.
We survived the Great recession.
Wife became a US citizen.
Delayed retirement until 55.
Transfered to an International Expat assignment and ramped up salary and savings.
Built a house in Thailand with cash.
Had two little miracles, both girls, age 3.5 and 7 months.
Have accurate expected living expense data.
Still have a house in the USA with equity of $200,000 rented out.
Improved Social Security numbers
Improved non-COLA pension numbers
Here is the new calculations:
Input Data for this model
Withdrawals 24,000
Plan End 60
95% Rule from WorkLess, Live More*
Percentage used for 95% Rule* 0
Bernicke Spending Reductions*
Current Age (for scheduling Bernicke spending reductions)* 48
Starting Portfolio 1,322,000
Percent in Stocks 75%
Expense Ratio 0.18%
Retirement Year* 2016
Contributions until then* 25,000
Social Security* 1,710
Starting in* 2022
Spouse Social Security* 0
Starting in* 2030
Other withdrawal change* -1,050
Starting in* 2016
Inflation adjusted* no
Other withdrawal change* +0
Starting in* 2020
Inflation adjusted* yes
Other withdrawal change* +0
Starting in* 2024
Inflation adjusted* yes
Lump sum change to portfolio* +0
In year 2018
Lump sum change to portfolio* +0
In year * 2028
Lump sum change to portfolio* +0
In year * 2033
Inflation Rate selected* CPI
Fixed income model * LongInterest
Override start year* 1871
Terminal Value* 0
US Micro Cap** 10
US Small** 10
US Small Value** 10
S&P 500** 40
US Large Value** 40
US LT Treasury** 10
LT Corporate Bond** 15
1 Month Treasury** 5
* - Used in Advanced FIRECalc

FIRECalc Results
Your spending in every year after the first year will be adjusted for inflation, so the spending power is preserved.
Because you indicated a future retirement date (2016), the withdrawals won't start until that year. Your contributions will continue until then. The tested period is 1 years of preretirement plus 59 years of retirement, or 60 years.
FIRECalc looked at the 84 possible 60 year periods in the available data, starting with a portfolio of $1,322,000 and spending your specified amounts each year thereafter.
Here is how your portfolio would have fared in each of the 84 cycles. The lowest and highest portfolio balance throughout your retirement was $1,322,000 to $50,390,261, with an average of $22,796,586.For our purposes, failure means the portfolio was depleted before the end of the 60 years. FIRECalc found that 0 cycles failed, for a success rate of 100.0%.

 

[sailor]

Congratulations and thanks for the update
It's very valuable for me to see how long term plans work for various members.
Are you planning to be absentee landlord for a long time?
Also - you social security amount is quite small - are you sure you used annual value and not the monthly one?

 

[mikeL]

Congratulations and thanks for the update
It's very valuable for me to see how long term plans work for various members.
Are you planning to be absentee landlord for a long time?
Also - you social security amount is quite small - are you sure you used annual value and not the monthly one?

Thanks for pointing out my mistake. I don't multiply the SS or pension by 12.
I don't want to rent. I really want to get the house sold.
Here is the corrected calculation
Input Data for this model
Withdrawals 24,000
Plan End 60
95% Rule from WorkLess, Live More*
Percentage used for 95% Rule* 0
Bernicke Spending Reductions*
Current Age (for scheduling Bernicke spending reductions)* 48
Starting Portfolio 1,322,000
Percent in Stocks 75%
Expense Ratio 0.18%
Retirement Year* 2016
Contributions until then* 25,000
Social Security* 20,520
Starting in* 2022
Spouse Social Security* 0
Starting in* 2030
Other withdrawal change* -12,600
Starting in* 2016
Inflation adjusted* no
Other withdrawal change* +0
Starting in* 2020
Inflation adjusted* yes
Other withdrawal change* +0
Starting in* 2024
Inflation adjusted* yes
Lump sum change to portfolio* +0
In year 2018
Lump sum change to portfolio* +0
In year * 2028
Lump sum change to portfolio* +0
In year * 2033
Inflation Rate selected* CPI
Fixed income model * LongInterest
Override start year* 1871
Terminal Value* 0
US Micro Cap** 10
US Small** 10
US Small Value** 10
S&P 500** 40
US Large Value** 40
US LT Treasury** 10
LT Corporate Bond** 15
1 Month Treasury** 5
* - Used in Advanced FIRECalc

FIRECalc Results
Your spending in every year after the first year will be adjusted for inflation, so the spending power is preserved.
Because you indicated a future retirement date (2016), the withdrawals won't start until that year. Your contributions will continue until then. The tested period is 1 years of preretirement plus 59 years of retirement, or 60 years.
FIRECalc looked at the 84 possible 60 year periods in the available data, starting with a portfolio of $1,322,000 and spending your specified amounts each year thereafter.
Here is how your portfolio would have fared in each of the 84 cycles. The lowest and highest portfolio balance throughout your retirement was $1,322,000 to $64,540,198, with an average of $32,575,271. (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 60 years. FIRECalc found that 0 cycles failed, for a success rate of 100.0%.

 

[rodi]

Hi.
Is there a reason you choose 60 year retirement. Have you run firecalc with shorter runs. 60 years excludes some historical bad markets at the beginning of retirement. (Google "sequence of returns ")

 

[mikeL]

Hi.
Is there a reason you choose 60 year retirement. Have you run firecalc with shorter runs. 60 years excludes some historical bad markets at the beginning of retirement. (Google "sequence of returns ")

My wife is younger and has longevity in her family. I want to leave money to my children. Those are the reasons for the time frame.
At 30 years:FIRECalc looked at the 114 possible 30 year periods in the available data, starting with a portfolio of $1,322,000 and spending your specified amounts each year thereafter.
Here is how your portfolio would have fared in each of the 114 cycles. The lowest and highest portfolio balance throughout your retirement was $1,322,000 to $13,361,797, with an average of $6,806,138. (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 30 years. FIRECalc found that 0 cycles failed, for a success rate of 100.0%.

I am undecided and could use some advice.
To address market declines early in the retirement I have some choices to make.
1 Claim my reduced pension at 55. 100% survivor $1050, single life annuity= $1680/mo

2. Use the cash I have to carry me until 60 and then claim my unreduced no-cola pension payments that have increased from age 55 to 60 to 100% survivor= $1790/mo, single life annuity = $2844.

3. Claim my Social Security at age 62 = $1710/mo and the child benefit of $853/mo. At age 65 suspend my benefit and reclaim at age 70.

I do have a life insurance policy of $500,000 until age 70. Originally I thought it might be better to claim the no-cola single life annuity pension instead of the 100% no-cola survivor option. Today I'm undecided.

Any advice?
Thanks
Mike

 

[rodi]

As far as leaving $ to your survivors - there is an option for that in firecalc... Under the "Investigate" tab.

I understand wanting to make sure your plan survives 60 years - but it's a good idea to run 30, 40, and 50 as well. My nominal plan is 40 years - but I always run 25, 30, 35 years as well and make sure the worst case ending point isn't super low.

 

[mikeL]

As far as leaving $ to your survivors - there is an option for that in firecalc... Under the "Investigate" tab.

I understand wanting to make sure your plan survives 60 years - but it's a good idea to run 30, 40, and 50 as well. My nominal plan is 40 years - but I always run 25, 30, 35 years as well and make sure the worst case ending point isn't super low.

I didn't try that option because I don't know how much I can leave.
I'm trying to stress test it but so far I get 100% no matter what I try.
I've removed my pension and social security and I still get 100%
I've changed to 100% equity....100%.

I guess it means I don't need to collect pension or social security early. But it does look suspicious.