Can I Successfully Retire ?
Can I Successfully Retire ?
Looking for some guidance and advice from Bogelheads with respect to retirement.
Income:
Age: 68
Working 5 days a week (4 days remote & 1 day in office) full time
State; NY (HCOL)
Income: $ 95K per yr (includes small pension of 21K {no COLA} from prior employer)
SS - waiting to file at 69 or 70 y/o = Approx #3700/ mo
Expenses:
Rent $2100 per mo.
Car Loan $400/ mo (@2.8%) 8 payments left
Elec $100/ mo
Gas Heat 60.00 per mo.
Groceries $300/ mo.
Credit Card - $200 to $300/ mo. Paid off each month
Insurance - Car - Tenant’s - Pers Cat Pol = $2,000 per yr
TV & Internet - $175 per mo.
Telephone - $100 per mo.
Health Ins. Employer Sponsored plan $ 125 per mo.
Out of Pocket Medical Expenses $ 2000 per year approx
Vacation $3000 to 5000 per year
I contribute $800 per month to my employers 401(k) plan - Roth
Savings and Investments:
Vanguard:
Brokerage
Vanguard Federal MM - $120K
Vanguard 500 Index (VFIAX) - $5600
AEP (American Elec Power) - $10,600
IRA
Vanguard Balanced Index (VBIAX) $641K
Van Total Stock (VTI) $29K
Roth IRA
Vanguard Tot Stock (VTSAX) $19,500
Roth 401(k) $35K total
Fidelity 500 Index (FXAIX) $21K
Vanguard Inflation Protected Index (VAIPX) 14K
Action Plan:
Naturally with market down I am concerned about entering into retirement now
FICalc results for 60/40 portfolio for a 25 yr retirement has 100% success rate with 35k withdrawal per yr. For a 700k portfolio. Is it enough?
I will consider buying a small condo in LCOL area to avoid future rent increases
I have read some reviews of Mark Zoril’s Planvision firm and will consider hiring him for input.
Am I on track? I would appreciate any input from the BH community
Income:
Age: 68
Working 5 days a week (4 days remote & 1 day in office) full time
State; NY (HCOL)
Income: $ 95K per yr (includes small pension of 21K {no COLA} from prior employer)
SS - waiting to file at 69 or 70 y/o = Approx #3700/ mo
Expenses:
Rent $2100 per mo.
Car Loan $400/ mo (@2.8%) 8 payments left
Elec $100/ mo
Gas Heat 60.00 per mo.
Groceries $300/ mo.
Credit Card - $200 to $300/ mo. Paid off each month
Insurance - Car - Tenant’s - Pers Cat Pol = $2,000 per yr
TV & Internet - $175 per mo.
Telephone - $100 per mo.
Health Ins. Employer Sponsored plan $ 125 per mo.
Out of Pocket Medical Expenses $ 2000 per year approx
Vacation $3000 to 5000 per year
I contribute $800 per month to my employers 401(k) plan - Roth
Savings and Investments:
Vanguard:
Brokerage
Vanguard Federal MM - $120K
Vanguard 500 Index (VFIAX) - $5600
AEP (American Elec Power) - $10,600
IRA
Vanguard Balanced Index (VBIAX) $641K
Van Total Stock (VTI) $29K
Roth IRA
Vanguard Tot Stock (VTSAX) $19,500
Roth 401(k) $35K total
Fidelity 500 Index (FXAIX) $21K
Vanguard Inflation Protected Index (VAIPX) 14K
Action Plan:
Naturally with market down I am concerned about entering into retirement now
FICalc results for 60/40 portfolio for a 25 yr retirement has 100% success rate with 35k withdrawal per yr. For a 700k portfolio. Is it enough?
I will consider buying a small condo in LCOL area to avoid future rent increases
I have read some reviews of Mark Zoril’s Planvision firm and will consider hiring him for input.
Am I on track? I would appreciate any input from the BH community
Re: Can I Successfully Retire ?
How much of your nest egg do you plan to use for the condo? Will you be getting a mortgage? Before or after the car is paid off?
Your current expenses include employer sponsored health car at a very low price. Will you keep that in retirement? If not, have you figured out how much Medicare will be?
Do you have any idea what you want to do in retirement and what the associated costs will be with that?
As long as your expenses are genuinely dialed in, your projected SS will cover regular expenses and your pension will more than cover what you have listed as annual expenses. The nest egg is all buffer and you have a pretty significant portfolio for that purpose. This is a good place to be in!
Your current expenses include employer sponsored health car at a very low price. Will you keep that in retirement? If not, have you figured out how much Medicare will be?
Do you have any idea what you want to do in retirement and what the associated costs will be with that?
As long as your expenses are genuinely dialed in, your projected SS will cover regular expenses and your pension will more than cover what you have listed as annual expenses. The nest egg is all buffer and you have a pretty significant portfolio for that purpose. This is a good place to be in!
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Re: Can I Successfully Retire ?
Since it appears Social Security and your pension would cover almost all your listed expenses I don't see why you wouldn't be able to.
Re: Can I Successfully Retire ?
Yes. Your current expenses are covered. Your portfolio isn't event touched at current expenses. Yes. Retire now if you want to.
Nescio
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Re: Can I Successfully Retire ?
I would recommend that you make yourself a RETIREMENT expenses list. I did this years ago and update it as I learn more. What's medicare going to cost? What will insurance otherwise cost? What will taxes be? Getting all of this, you can come up with a number. That can then have your social security and pension subtracted from it. If that number becomes zero, you're done. Otherwise, you can get a rough estimate by dividing your savings by that number. Is it over 25? You're probably fine. 33? Good, retire. 50? Why are you working? (My number is over 50. DW won't let me retire at the moment)
Bogle: Smart Beta is stupid
Re: Can I Successfully Retire ?
OP,
1) What is your current annual expense?
2) What is your current annual savings/investment?
KlangFool
1) What is your current annual expense?
2) What is your current annual savings/investment?
KlangFool
30% VWENX | 16% VFWAX/VTIAX | 14.5% VTSAX | 19.5% VBTLX | 10% VSIAX/VTMSX/VSMAX | 10% VSIGX| 30% Wellington 50% 3-funds 20% Mini-Larry
Re: Can I Successfully Retire ?
You'll receive about $65k annually from your pension and social security. Your non-discretionary expenses are about $48k annually (including your soon to end car payment but not including your vacation budget). So if your estimates of income and expenses (and my math) are correct, you'll have a significant surplus each month just from your pension and social security income (without even touching your portfolio).
You'll be fine! Congratulations!
You'll be fine! Congratulations!
Re: Can I Successfully Retire ?
You likely are good to go, however. Do consider your retirement expenses. Likely your medicare/insurance costs will go up although you may be a candidate for a low cost advantage account. You will owe a couple thousand a year in federal income taxes. Don't know about NY taxes. Withdrawals from your IRA to supplement expenditures will cause additional SS dollars to become taxed.
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Re: Can I Successfully Retire ?
Hi OP,
Check out this FAQ post on another similar website that has some good questions to ask yourself to help decide:
https://www.early-retirement.org/forums ... 69999.html
All the best to you.
Check out this FAQ post on another similar website that has some good questions to ask yourself to help decide:
https://www.early-retirement.org/forums ... 69999.html
All the best to you.
"Rely heavily on index funds, and begin with the idea of a 50/50 bond/stock ratio, adjusting the ratio in accordance with your own financial profile"--J Bogle commentary on Pillar 2 of 12
Re: Can I Successfully Retire ?
Many thanks to all who took the time to view and respond to my post. I reviewed the recommendations and appreciate the thoughtful guidance.
I would use approx. 90k from the VG Fed MM for a down payment on a condo and mortgage about 250K. Not sure on purchase. I may continue to rent while housing market stabilizes.
My plan in retirement is to travel and keep active cycling with my local club, pickleball, beach/swimming. I don’t think I’ll be bored. May spend 2-3 months in Florida during the winter.
A Medicare supplement in my current location runs about $350 per month
Ongoing Retirement Exp List is a good idea. Also “happy wife - happy life” - stick with your plan and enjoy working. I like my job so it's one of the reasons I keep working.
I will not be able keep my employers healthcare plan in retirementsailaway wrote: ↑Wed Oct 05, 2022 4:17 pm How much of your nest egg do you plan to use for the condo? Will you be getting a mortgage? Before or after the car is paid off?
Your current expenses include employer sponsored health car at a very low price. Will you keep that in retirement? If not, have you figured out how much Medicare will be?
Do you have any idea what you want to do in retirement and what the associated costs will be with that?
As long as your expenses are genuinely dialed in, your projected SS will cover regular expenses and your pension will more than cover what you have listed as annual expenses. The nest egg is all buffer and you have a pretty significant portfolio for that purpose. This is a good place to be in!
I would use approx. 90k from the VG Fed MM for a down payment on a condo and mortgage about 250K. Not sure on purchase. I may continue to rent while housing market stabilizes.
My plan in retirement is to travel and keep active cycling with my local club, pickleball, beach/swimming. I don’t think I’ll be bored. May spend 2-3 months in Florida during the winter.
A Medicare supplement in my current location runs about $350 per month
Jack FFR1846 wrote: ↑Wed Oct 05, 2022 4:37 pm I would recommend that you make yourself a RETIREMENT expenses list. I did this years ago and update it as I learn more. What's medicare going to cost? What will insurance otherwise cost? What will taxes be? Getting all of this, you can come up with a number. That can then have your social security and pension subtracted from it. If that number becomes zero, you're done. Otherwise, you can get a rough estimate by dividing your savings by that number. Is it over 25? You're probably fine. 33? Good, retire. 50? Why are you working? (My number is over 50. DW won't let me retire at the moment)
Ongoing Retirement Exp List is a good idea. Also “happy wife - happy life” - stick with your plan and enjoy working. I like my job so it's one of the reasons I keep working.
I drilled down some more on the annual exp and come up with a liberal 55K; Investments annual = $9600 which is payroll ded. Employer contributes another 6%
Thank you for the web link. I will give it a look.southernlucky wrote: ↑Wed Oct 05, 2022 5:02 pm Hi OP,
Check out this FAQ post on another similar website that has some good questions to ask yourself to help decide:
https://www.early-retirement.org/forums ... 69999.html
All the best to you.
Re: Can I Successfully Retire ?
antwerp,
Gross income = annual expense + annual savings + Taxes
Your gross income = 95K per year.
If your annual expense = 55K per year,
Then, taxes = 95K - 55K - 9.6K = $30,400. This may not be correct.
Please look at your pay slip and last year tax filing to get your taxes. It looks like your current annual expense is probably more than 55K per year.
KlangFool
30% VWENX | 16% VFWAX/VTIAX | 14.5% VTSAX | 19.5% VBTLX | 10% VSIAX/VTMSX/VSMAX | 10% VSIGX| 30% Wellington 50% 3-funds 20% Mini-Larry
Re: Can I Successfully Retire ?
You might get better responses if you edit your posts to give all your expenses and income as either monthly or annual. You gave some of each which gets confusing. You can use the icon with a pencil on it to edit your post.
It would also be good to add several subtotals. For example I don't have a clue what your monthly expenses are and I am not going to add them all up.
When I was deciding if it was OK for me to retire one thing I did was a crude sensitivity analysis where I ran FireCalc for different amounts of savings and spending to see how far off I could be and still have a 90% or better chance of "success". I even made a simple graph which showed what the curve looked like. For example you could rerun your firecalc model with your $700K nestegg, then $650k, $600K, $550K, and so until the success rate gets below 80%. Likewise you can rerun your model then increase your annual spending by $5K, $10K, $15K etc until you get below the 80% successes rate.
If you do this then that could make you feel more comfortable what you are a long way from not being OK.
That is right about the median household income in the US and lots of people live on that especially in a low cost of living area.
It would also be good to add several subtotals. For example I don't have a clue what your monthly expenses are and I am not going to add them all up.
One bad thing about retirement calculators is that they usually give the results in terms of "success" or "failure". The problem with that is that "failure" sounds dire like you end up broke and homeless. In reality for most people what "failure" would really mean is that at some point they may need to reduce their spending by maybe 10% maybe when they are 75 if their portfolio is not doing as well as expected. Unless you are planning a bare bones retirement then that likely is not too bad a hardship.
When I was deciding if it was OK for me to retire one thing I did was a crude sensitivity analysis where I ran FireCalc for different amounts of savings and spending to see how far off I could be and still have a 90% or better chance of "success". I even made a simple graph which showed what the curve looked like. For example you could rerun your firecalc model with your $700K nestegg, then $650k, $600K, $550K, and so until the success rate gets below 80%. Likewise you can rerun your model then increase your annual spending by $5K, $10K, $15K etc until you get below the 80% successes rate.
If you do this then that could make you feel more comfortable what you are a long way from not being OK.
$3700 a month is $44,400 a year with the pension that is over $65K a year.
That is right about the median household income in the US and lots of people live on that especially in a low cost of living area.
Re: Can I Successfully Retire ?
I checked last years federal return and my AGI was 101K because I had some capital gains. Taxable income was 86K and standard deduction was taken.KlangFool wrote: ↑Wed Oct 05, 2022 7:09 pmantwerp,
Gross income = annual expense + annual savings + Taxes
Your gross income = 95K per year.
If your annual expense = 55K per year,
Then, taxes = 95K - 55K - 9.6K = $30,400. This may not be correct.
Please look at your pay slip and last year tax filing to get your taxes. It looks like your current annual expense is probably more than 55K per year.
KlangFool
Running FICalc for differing scenarios is a good idea. All of the support I have received on this site makes me feel more confident about retiring. As long as my health remains good, I will continue to work and delay retirement until I start drawing SS.Watty wrote: ↑Wed Oct 05, 2022 7:38 pm You might get better responses if you edit your posts to give all your expenses and income as either monthly or annual. You gave some of each which gets confusing. You can use the icon with a pencil on it to edit your post.
It would also be good to add several subtotals. For example I don't have a clue what your monthly expenses are and I am not going to add them all up.
One bad thing about retirement calculators is that they usually give the results in terms of "success" or "failure". The problem with that is that "failure" sounds dire like you end up broke and homeless. In reality for most people what "failure" would really mean is that at some point they may need to reduce their spending by maybe 10% maybe when they are 75 if their portfolio is not doing as well as expected. Unless you are planning a bare bones retirement then that likely is not too bad a hardship.
When I was deciding if it was OK for me to retire one thing I did was a crude sensitivity analysis where I ran FireCalc for different amounts of savings and spending to see how far off I could be and still have a 90% or better chance of "success". I even made a simple graph which showed what the curve looked like. For example you could rerun your firecalc model with your $700K nestegg, then $650k, $600K, $550K, and so until the success rate gets below 80%. Likewise you can rerun your model then increase your annual spending by $5K, $10K, $15K etc until you get below the 80% successes rate.
If you do this then that could make you feel more comfortable what you are a long way from not being OK.
$3700 a month is $44,400 a year with the pension that is over $65K a year.
That is right about the median household income in the US and lots of people live on that especially in a low cost of living area.
Many thanks to the BH community.