How do I know I have enough to retire

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roncle329
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How do I know I have enough to retire

Post by roncle329 » Fri Apr 15, 2016 5:20 pm

I have a pension of 60k per yr. 500k in 401k, plan on taking early SS at 62 (I'm 61) all of my debt, housing and alimony come to 51k. Spouse works and won't retire for minimum 15 years. salary currently 125k, no debt. how do you know its enough?

ljb1234
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Re: How do I know I have enough to retire

Post by ljb1234 » Fri Apr 15, 2016 5:58 pm

$60K > $51K = enough

If your spouse makes $125K/yr and is going to work for 15 more years, why would you take SS at 62?
Do you have a health issue? Just wondering.

Is this your current spouse, soon to be ex, or already ex?
How long does the alimony last and how much of the $51K is it?

randomguy
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Re: How do I know I have enough to retire

Post by randomguy » Fri Apr 15, 2016 6:22 pm

ljb1234 wrote:$60K > $51K = enough

If your spouse makes $125K/yr and is going to work for 15 more years, why would you take SS at 62?
Do you have a health issue? Just wondering.

Is this your current spouse, soon to be ex, or already ex?
How long does the alimony last and how much of the $51K is it?
There are potential inflation issues (assume pension isn't indexed) and healthcare (i.e. if the company is currently paying 10k+/year and SS will cost more than you are currently spending) but yeah if expenses are 51k and you have a 60k pension, 500k in assets, and some SS, you are in a pretty solid spot. And yes everyone here will tell you to defer SS.

Obviously there is potential for situations (i.e. what if your spouse is forced to retire in 5 years due to a health scare) that can change your assumptions. You need to decide how much you want to worry about those cases.

Rodc
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Re: How do I know I have enough to retire

Post by Rodc » Fri Apr 15, 2016 6:41 pm

That is not much cushion for inflation it the $51k per year continues forever if your SS is low.

Of course if wife's salary is well over her expenses and she does not mind sharing you are in good shape.

Not really enough information to know your situation.
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.

furnace
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Re: How do I know I have enough to retire

Post by furnace » Fri Apr 15, 2016 7:24 pm

roncle329 wrote:I have a pension of 60k per yr. 500k in 401k, plan on taking early SS at 62 (I'm 61) all of my debt, housing and alimony come to 51k. Spouse works and won't retire for minimum 15 years. salary currently 125k, no debt. how do you know its enough?
You can bring your $51k spending down by having your current wife pay your ex-wife the alimony cost :sharebeer It's a small price to be with the man of her dream, right? It's called "replacement" cost.

randomguy
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Re: How do I know I have enough to retire

Post by randomguy » Fri Apr 15, 2016 7:37 pm

Rodc wrote:That is not much cushion for inflation it the $51k per year continues forever if your SS is low.

Of course if wife's salary is well over her expenses and she does not mind sharing you are in good shape.

Not really enough information to know your situation.
With 60k fixed and 500k of assets, firecalc has you spending 51k for 30 years at 95%. Throw in 15k of SS bumps that to 100%. You could up your spending to 65k/yr and still have a 97% success rate. If the expense numbers are right, there isn't an issue. Obviously estimating expenses has a lot of guess work involved.

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SeeMoe
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Re: How do I know I have enough to retire

Post by SeeMoe » Fri Apr 15, 2016 7:45 pm

Why not payoff that debt first, then retire? Help the spouse out around the house, doing errands and keeping her happy over the coming years and enjoy yourself on "enough..."
SeeMoe.. :beer
"By gnawing through a dike, even a Rat can destroy a nation ." {Edmund Burke}

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DR
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Re: How do I know I have enough to retire

Post by DR » Sat Apr 16, 2016 10:53 am

You don't say how much longer on the mortgage and a few other things.

But even just glancing at the numbers, others in that situation would say: "how are we ever going to scrape by on that amount?" and others would say, "how are we every going to spend all that money?"

Just use FireCalc or ESPlanner to see what your annual discretionary spending is over the life time and ask yourself if you can live on that amount or not. There's no substitute for building the model and deciding for yourself.

roncle329
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Re: How do I know I have enough to retire

Post by roncle329 » Sat Apr 16, 2016 12:18 pm

spouse is 15 yrs younger and in perfect health according to her drs. Me, I have some minor health issues, but live life well. no cancer, get screened every year, every part of me in and out. that said. add'l info is spouse has no debt. My 51k will pay mtge, all house bills and my alimony, when she turns 50 wife will then max 401k before tax + catch up she
will pay for the new car she intends to buy and we will travel as we do now.
Mexico for 2 weeks, Florida for 2 and a few long wk ends in between. we are not extravagant when we travel either. bargains galore if you look for them hard. lol...
I could defer SS to full age, but at 62 its projected to be 23k. I've been paying the maximum amount for quite a few years and have invested the remaining months of ss ins payments to my company stock. It has a value of 90 k and pays an average 3.5% dividend, which I currently reinvest to more stock.
so I guess that's a little more income if I take the dividends..3500 per yr +/-.
I'm just getting tired or working, been at it for over 40 yrs, 42 with the same company in many different jobs. Retirement weighs heavy on my mind, but of course I don't want to be an anchor either by being unprepared.

reggiesimpson
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Re: How do I know I have enough to retire

Post by reggiesimpson » Sat Apr 16, 2016 5:12 pm

Well actually you never know because you cant predict the future.
I prefer the old adage "make so much money it doesn't matter".
Good luck!

hoops777
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Re: How do I know I have enough to retire

Post by hoops777 » Sat Apr 16, 2016 7:38 pm

You are great as long as wife 2 does not become like wife 1 and that pension doesn't go anywhere.Two big uncertainties :D
K.I.S.S........so easy to say so difficult to do.

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wshang
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Re: How do I know I have enough to retire

Post by wshang » Sun Apr 17, 2016 11:37 pm

Obviously by way of asking you are looking for blind spots. Suppose your wife has a major illness followed by disability. Add a 50% drop in the stock market. Could you survive that?

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HomerJ
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Re: How do I know I have enough to retire

Post by HomerJ » Mon Apr 18, 2016 12:43 am

What are your expenses?

Not how much you or your wife makes... how much do you spend each month? You need to track your spending and figure that out first.

Your pension and SS will give you $83,000 a year, and your wife makes $125,000 a year. That's without touching your savings. That's a ton of money. But maybe you spend $250,000 a year, so you better keep working.

Figure out what your spending is (don't forget expenses like a new car every 10 years or so, and money for house maintenance like a new air conditioner, etc.)

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obgyn65
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Re: How do I know I have enough to retire

Post by obgyn65 » Mon Apr 18, 2016 12:51 am

Based upon the information provided, I would say the OP does not have enough to retire. Sorry.
"The two most important days in someone's life are the day that they are born and the day they discover why." -John Maxwell

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HomerJ
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Re: How do I know I have enough to retire

Post by HomerJ » Mon Apr 18, 2016 12:53 am

obgyn65 wrote:Based upon the information provided, I would say the OP does not have enough to retire. Sorry.
What information was provided?

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obgyn65
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Re: How do I know I have enough to retire

Post by obgyn65 » Mon Apr 18, 2016 12:56 am

Based upon the information provided in the opening post by the OP, I would say he does not have enough to retire yet. Sorry if I was not clear.
HomerJ wrote:
obgyn65 wrote:Based upon the information provided, I would say the OP does not have enough to retire. Sorry.
What information was provided?
"The two most important days in someone's life are the day that they are born and the day they discover why." -John Maxwell

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HomerJ
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Re: How do I know I have enough to retire

Post by HomerJ » Mon Apr 18, 2016 8:56 am

obgyn65 wrote:Based upon the information provided in the opening post by the OP, I would say he does not have enough to retire yet. Sorry if I was not clear.
HomerJ wrote:
obgyn65 wrote:Based upon the information provided, I would say the OP does not have enough to retire. Sorry.
What information was provided?
I think what's not clear is the information provided. Does he have a $125k salary? Does his wife? Do they make that much together?

I'm not quite sure what he means by "all of my debt, housing, and alimony" comes to $51k. Is he talking expenses a year? Does that cover everything? Or that he still owes a lump sum of $51k for credit-cards, mortgage, alimony, and we have no idea what his expenses are?

If his basic needs are covered by $51k a year and he has a pension of $60k, plus SS of $23k, of course he can retire. Especially if his wife keeps working! But I'm guessing the numbers are completely different.

heyyou
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Re: How do I know I have enough to retire

Post by heyyou » Mon Apr 18, 2016 10:19 am

I'm not quite sure what he means by "all of my debt, housing, and alimony" comes to $51k. Is he talking expenses a year? Does that cover everything? Or that he still owes a lump sum of $51k for credit-cards, mortgage, alimony, and we have no idea what his expenses are
There is the communication problem about the OP's info.

At the OP: The usual mantra is to have savings of 25 times your current spending (excluding what Social Security(SS) and pension pays) since an early study indicated that you could pull 4% inflation protected for 30 years. These days, there are refinements, to boost the spending if you are adaptable to varying income. Those refinements include no inflation boost on years when markets returns are negative, and an upper limit on each annual inflation boost. There are multiple other methods of withdrawing from your portfolio, which are less likely to have so much money left over. It turns out that spending to match the worst case scenario, leaves behind too much money if the worst case does not occur. The 25x current spending is still a good number for nest egg size after the SS and pension are deducted from the desired retirement income.

Since no one can see into the future, we are all taking a risk when we retire. One good buffer is to have discretionary spending such as travel, that can be reduced if future returns are worse than historical ones. An example is DW and I will visit Florida and Texas beaches when visiting Hawaii is no longer affordable for us.

Depending on what your SS and pension pay compared with hers, you might consider how delaying your SS until you are 70, will give her more inflation protected income after you are gone. That is regardless of how much the markets return, or how much of the nestegg is spent, during your retirement.

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