Can I Retire?

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Topic Author
fiseek77
Posts: 27
Joined: Mon Oct 22, 2018 1:03 pm

Re: Can I Retire?

Post by fiseek77 »

GodzillaBorland wrote: Thu Dec 19, 2019 1:17 am
fiseek77 wrote: Tue Dec 17, 2019 5:07 pm

Taxable Account Total: 800,000
Tax Deferred: 410,000
Tax Free: 260,000
This is probably a bit off topic, have you considered deploying some of the taxable or even tax deferred into real estate? If you are retired your tax deferred can be rolled into a self directed IRA -> Real Estate IRA and use for buying properties that generate a monthly rental income with possible asset appreciation in the future. Granted this is more work but you are retired, right? Besides this is more of a diversification than stocks, bonds which all financial advisors tout not realizing they are the same asset class anyway..
I thought about real estate , one school of thought is to have some kind of income to match at least the essential expenses and another school of thought is to rely on total return approach and have a healthy mix of stock/bonds to weather through bear markets. One problem with real estate it generates income month in month out that might be helpful to meet expenses but hard for tax planning purposes. I am currently some where in the middle. I am currently planning to generate about 15-20 K of income out of my portfolio and rely on selling stocks/bonds to manage the additional need. One advantage of dividends/ long term capital gains from stocks is that they have 0% taxes if you stay in the low income brackets.

Not as guaranteed as RE, but open to knowing more about using RE ..Thanks for your suggestion.
Topic Author
fiseek77
Posts: 27
Joined: Mon Oct 22, 2018 1:03 pm

Re: Can I Retire?

Post by fiseek77 »

Wiggums wrote: Tue Dec 17, 2019 7:55 pm I’d encourage you to verify your retirement expenses. I.e., medical, dental and vision. Taxes and mortgage. New roof, car, a/c, travel, etc. you will take a hit on social security due to some years with zeros or low wages?

Plot out where you are going to pull the money from each year. For example: 49-59 from taxable account.

If your retirement expenses are accurate, I think you have enough. Hopefully the economy will cooperate. I think your investment return is higher than what I would use.

I retired at 56, but was able to collect my pension immediately. No mortgage, kids college fully funded and a little closer to 59.5.

Good luck to you...
Thank you. I am beyond the second bend point in social security. Additional money in will not generate much more income. I am using 5% nominal with 2% inflation. I do not want to use too low a number. AS Firecalc allows you only to enter one number for return and S.D, I used 5%. Do you think we will get much lower return for the next 40 years??

My theory is even if we hit a decade of 1% return, the next decade will compensate bringing the average up (2000-2010,2010-2020) as an example. I am also somewhat diversified globally. If the entire world slows down for next 40 years, there are bigger problems to worry about!!
Topic Author
fiseek77
Posts: 27
Joined: Mon Oct 22, 2018 1:03 pm

Re: Can I Retire?

Post by fiseek77 »

delamer wrote: Tue Dec 17, 2019 7:14 pm
Your original post asked if you can retire and/or if you had any blind spots. My point is that assuming you can retire based on one investment return/inflation scenario is a blind spot.
Fair point. Thanks.
User avatar
abuss368
Posts: 23069
Joined: Mon Aug 03, 2009 2:33 pm
Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!
Contact:

Re: Can I Retire?

Post by abuss368 »

Overall you should be fine.

I noticed the lower allocation of the portfolio to bonds. Are you comfortable with that? If the markets pull back and equities are one-half the value would you be up at night? Perhaps you may want to consider increasing the allocation to bonds.

Any possibility of continuing to work for a very short period and pay down the mortgage?
John C. Bogle: “Simplicity is the master key to financial success."
User avatar
JoeRetire
Posts: 6641
Joined: Tue Jan 16, 2018 2:44 pm

Re: Can I Retire?

Post by JoeRetire »

fiseek77 wrote: Thu Dec 19, 2019 5:46 pm Looks like you are fundamentally opposed to paying off a low cost mortgage at all costs.
Fundamentally opposed? Not at all. Everyone can do whatever they choose. I just try to understand their thought process.

At all costs? Not at all. I prefer to keep a low cost mortgage whenever it makes financial sense. I understand that some have an emotional rather than financial abhorrence to mortgage debt. I don't.

Your mileage may vary.
It's the end of the world as we know it. | It's the end of the world as we know it. | It's the end of the world as we know it. | And I feel fine.
thelateinvestor43
Posts: 626
Joined: Fri Nov 15, 2019 2:02 am
Location: Westbrook, Maine

Re: Can I Retire?

Post by thelateinvestor43 »

Just think about all the old people that have to either take their pills or eat and you'll have a better appreciation of the million dollars you have. I saw a guy last night here in Maine sleeping in a sleeping bag in 20 F weather. We have to be thankful that we have food in out stomachs and a warm place to sleep. Have you ever been to India ....... ?
CheepSkate
Posts: 35
Joined: Thu Nov 07, 2019 10:23 pm

Re: Can I Retire?

Post by CheepSkate »

1) Yes you can retire at a 3.5% WR. Your odds of following the plan and still running out of money are similar to your odds of dying in a commuting accident or from office chair syndrome or getting cancer from adulterated office coffee. Your odds of financial success are something like 98%. Then you have the home equity and geoarbitrage options to cover the 2%. If that’s not good enough, what will be?

2) I would be reluctant to pay off a mortgage with that low a rate. Hell, the investment grade bond fund LQD yields 3.29%. Imagine the arbitrage if interest rates rise. This is where common sense conflicts with the mantra to establish a low WR. There is an inflection point where playing it too safe creates a vulnerability (to inflation or historically low interest rates).
TheLongHaul1925
Posts: 2
Joined: Fri Dec 20, 2019 6:31 pm

Re: Can I Retire?

Post by TheLongHaul1925 »

Maybe the answer would be easier if you considered working another 10 years, maybe doubling your worth. (rule of 72) 2.6M..... Paying off mortgage in the mean time. About 15 years ago I asked the same question and worked extra 10 years. I doubled what I thought was needed as total and went 50/50 AA. Worked great for me. Just another angle to look at. Cheers
User avatar
willthrill81
Posts: 22629
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: Can I Retire?

Post by willthrill81 »

TheLongHaul1925 wrote: Fri Dec 20, 2019 7:10 pm Maybe the answer would be easier if you considered working another 10 years, maybe doubling your worth. (rule of 72) 2.6M..... Paying off mortgage in the mean time. About 15 years ago I asked the same question and worked extra 10 years. I doubled what I thought was needed as total and went 50/50 AA. Worked great for me. Just another angle to look at. Cheers
Welcome to the forum!

There's no good financial reason for the OP to spend another decade working to pad an already well padded situation. A 3.5% withdrawal rate plus a pension plus SS benefits is already great. There's no need to play limbo, especially if the OP doesn't want to keep working just for the fun of it.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
User avatar
abuss368
Posts: 23069
Joined: Mon Aug 03, 2009 2:33 pm
Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!
Contact:

Re: Can I Retire?

Post by abuss368 »

I would consider possibly working a little while longer and just pay down/off debt. Is that an option you have considered?

This would help the portfolio in terms of having additional flexibility during the next market pullback.
John C. Bogle: “Simplicity is the master key to financial success."
bb
Posts: 324
Joined: Wed Apr 25, 2007 10:04 pm

Re: Can I Retire?

Post by bb »

TheLongHaul1925 wrote: Fri Dec 20, 2019 7:10 pm Maybe the answer would be easier if you considered working another 10 years, maybe doubling your worth. (rule of 72) 2.6M..... Paying off mortgage in the mean time. About 15 years ago I asked the same question and worked extra 10 years. I doubled what I thought was needed as total and went 50/50 AA. Worked great for me. Just another angle to look at. Cheers
You failed to explain why working an additional 10 years was the correct choice.
TheLongHaul1925
Posts: 2
Joined: Fri Dec 20, 2019 6:31 pm

Re: Can I Retire?

Post by TheLongHaul1925 »

If nothing else but a solid buffer to do most anything you want. Just in case of medical or maybe you live another 45 years. If the market plunged your first 5-10 years in retirement, your chances of your next 35 years and your money lasting are reduced more than you might be comfortable with.
marcopolo
Posts: 3869
Joined: Sat Dec 03, 2016 10:22 am

Re: Can I Retire?

Post by marcopolo »

TheLongHaul1925 wrote: Fri Dec 20, 2019 10:44 pm If nothing else but a solid buffer to do most anything you want. Just in case of medical or maybe you live another 45 years. If the market plunged your first 5-10 years in retirement, your chances of your next 35 years and your money lasting are reduced more than you might be comfortable with.
Well, why stop at just 10 more years, why not 20 more, that would give you an even bigger cushion. In fact, if you just keep working until you die, you can really reduce the risk of running out of money.
Once in a while you get shown the light, in the strangest of places if you look at it right.
Topic Author
fiseek77
Posts: 27
Joined: Mon Oct 22, 2018 1:03 pm

Re: Can I Retire?

Post by fiseek77 »

Thanks everyone for your valuable insights. Here is a summary of what I learned.

1. Consider lowering the expected return to stress test - This may not lead to any actions at least I will know the worst case scenario. Currently my assumption is 5% nominal/3% real returns for my portfolio.

2. Consider reducing expected SS income by 25% in projections.
3. Have a sinking fund for one time big ticket expenses - car/roof etc.
4. Deciding between relying on income for essential expenses versus a total return approach - currently mine is total return (with a good bond allocation).
5. I have made up my mind to payoff mortgage before retiring - though there are some opinions on retaining it due to low cost (2.75%)
6. Revisit expenses and add some more expenses for enjoyment allows you to enjoy retirement more - means working more years.
7. Have a plan on life after retirement, revisit and work the plan.

It is great to know that majority of you feel that I can retire. I will hang on a bit more (hopefully not too long), to payoff some more mortgage, create a sinking fund and allow for some buffer in case of lower expected return and cut in Social security. It is a golden handcuff and hard to get rid off (mentally) . :-).

More importantly, i feel thankful for what I have and have definitely considered those who have less and survive. It is not that I totally hate my job but it is a question of trying to do something else with my life. As I have heard others say, stress related to work affects you differently as you age (i can definitely see that in the last year or so).

Hopefully I can design the third leg of my life more thoughtfully with less materialism and more experience.

Thanks again for your time looking into my situation and your valuable insights.

Happy Holidays!
Post Reply