Hi all,
I am considering retiring someplace less expensive than the Northeast. ....or perhaps a career change where money isn't a big consideration.
Recently laid off at 46, but with full pay for the rest of 2017. I'll be 47 when the severence stops. I did 25 years in corporate america.
My net worth is about 3m if you add in pre tax retirement savings.
-700k in pension lump sum (or 50k per yr at 65)
-825k in 401k (about 150k is post tax)
-125k in Roth IRA
-1,100 In brokerage account mostly mutual funds
-200K in equity (house worth 525k with 325k left on morthgage)
Single, no kids, light spender.
Appreciate any wisdom....
I think you're in good shape.
I'd not count the home equity in your portfolio; leaving you a $2.75M investable portfolio if you take the pension LS. You'll have to live somewhere & will likely use that $200k to buy your next place; especially true if you want to keep your total monthly housing costs to your estimated $1.5k
The benefit is fixed, so there is no cola. The plan is well funded. I think in the 90% range at the moment. The company is stable.
Taking the lump sum would allow me to diversify and hopefully increase the future benefit. ... Albeit not with ought some risk.
I would take the lump sum. If my quick NPV calc is correct, you'd only need 3.25%/yr return on the $700k LS to come out better; a pretty easy hurdle.
Welcome!
I assume your 1,100 is 1,100k.
What does light spender mean to you. Without that information it is hard to say, but a SWR of 3.33% for $3M is $100k, so if your spend including taxes and healthcare is less than that I would say congratulations and enjoy.
A $2.75M portfolio would produce $80k/yr @ a 2.90%/yr WR, which seems a conservative enough "starting point" for a 46 yo. I say "starting point" for a couple of reasons: (1) you would have a 50yr+/- planning horizon, and that will take adjustments, financial & otherwise; (2) you don't seem to have a good handle on your expenses, and that's
very important (I agree with the early post on using Mint [or another app] to track that). To understand how important knowing your expenses is, your multiplier is 400 @ a WR of 2.9%/yr. So, for every additional $1,000/mo you spend in FIRE, you will need $400k more NW to sustain it. So, get a handle on your expenses.
Downsize, take a break, relax. No need to decide at your age. Can you decide later about the pension?
But, in your (excellent) financial position...what he said. Take a break, relax, take some time to decide the path for the next stage of your life.
Also, since you're a golfer, join us over @ the "Golf Talk Tuesdays" thread. I'm sure Big Hitter, gcgang & others can encourage and entertain you.