ok to pull plug and retire?

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Topic Author
pivoprussia
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ok to pull plug and retire?

Post by pivoprussia »

I went part-time 1.5 years ago but am seriously considering retiring. I would appreciate constructive input to any aspects of my financial picture that I have not yet considered.

Married, mid-40s, 2 kids <10
debt: none
non-qualified investments: 9.8m
qualified investments: 750k
house: 1.5m
529: 160k

AA: 65% stocks with 25% international, 34% tax-free bonds, 1% cash
Invested in VG with ER of 0.16

I would be eligible for SS someday if not phased out, wife would not be.

Have term life policy on me for family in ILIT @ 5m
Have large umbrella policy - 10m

2016 expenses: 136k
I anticipate this to average between 150k-200k per year before inflation (easily could be less but prefer to overestimate).
Given the high percentage of non-qualified investments I feel ER is very doable.
I have run FIRECalc numerous times all with 100% success.

Am I missing anything or I am good to go? TIA
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David Jay
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Re: ok to pull plug and retire?

Post by David Jay »

2.5% is often considered to be a"perpetual" withdrawal - one that can be maintained over any lifetime.

10.6M * .0025 = $262,000

If your expenses are accurate then I think you are good to go.
It's not an engineering problem - Hersh Shefrin | To get the "risk premium", you really do have to take the risk - nisiprius
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Kenkat
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Re: ok to pull plug and retire?

Post by Kenkat »

You had me at $9.8 million. Your withdrawal rate will be below 2%; you should be in great shape to retire whenever you'd like.
J295
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Re: ok to pull plug and retire?

Post by J295 »

financial looks great.
I went PT at 53, which was 4 yrs ago. Considering going to "full time dad with grown independent kids" in the near term. :happy

My spouse and I LOVE this latest adventure and I hope you and your family do as well. We are fortunate to be able to take another path.

Best of luck ...
toto238
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Re: ok to pull plug and retire?

Post by toto238 »

You were ready to retire $5million ago.

Enjoy retirement! :sharebeer
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sdsailing
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Re: ok to pull plug and retire?

Post by sdsailing »

12 million in assets? It will be pretty tight but you will probably be OK.
RAchip
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Re: ok to pull plug and retire?

Post by RAchip »

Do you have a strategy for health insurance?
scubadiver
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Re: ok to pull plug and retire?

Post by scubadiver »

Were I in your shoes with your assets and expenses, I would be calling in sick tomorrow (and I like my job).

Yes, you're good to pull the plug. Congrats!
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Wildebeest
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Re: ok to pull plug and retire?

Post by Wildebeest »

You are good to go. I wonder how long it is going to take.

You are dead worth more than alive.

Not a risk I would take.
The Golden Rule: One should treat others as one would like others to treat oneself.
Topic Author
pivoprussia
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Re: ok to pull plug and retire?

Post by pivoprussia »

Health insurance premium 1000/mo - high deductible plan with HSA.
Plan to do max contribution yearly.
tim1999
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Re: ok to pull plug and retire?

Post by tim1999 »

Congratulations, you won the game! Quit tomorrow unless it's work you truly enjoy and feel you would otherwise get bored.
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LiveSimple
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Re: ok to pull plug and retire?

Post by LiveSimple »

If you are not good with this asset, then who else can be.
Invest when you have the money, sell when you need the money, for real life expenses...
JGoneRiding
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Re: ok to pull plug and retire?

Post by JGoneRiding »

David Jay wrote:2.5% is often considered to be a"perpetual" withdrawal - one that can be maintained over any lifetime.

10.6M * .0025 = $262,000

If your expenses are accurate then I think you are good to go.
I am curious on this. Wouldn't in fact be "perpetual" more or less indefinitely barring any great recession/cataclysmic event? If op wanted to it seems he could set up trusts going for income only distribution onto his great grand children. Aren't there other trusts like that were only the income is ever dispensed for multiple generations?
inbox788
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Re: ok to pull plug and retire?

Post by inbox788 »

Why not?
pop77
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Re: ok to pull plug and retire?

Post by pop77 »

You should be good to go. Just curious, do you like your job or cannot wait to get out. What is your line of work? If you have accumulated a good chunk in such young age, you should be loving what you are doing..
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tennisplyr
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Re: ok to pull plug and retire?

Post by tennisplyr »

Go for it, you could always change down the road if it's not working. In 100 years, non of this will have mattered.
“Those who move forward with a happy spirit will find that things always work out.” -Retired 13 years 😀
Frisco Kid
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Re: ok to pull plug and retire?

Post by Frisco Kid »

12 mil in assets with zero debt and a paid off house and OP is mid 40's. Game over, you have won. Maintain BH principles going forward and enjoy your life. Seriously, what is the question? At your asset level you are in the drivers seat, just don't do anything foolish. Congrats.............
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sunny_socal
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Re: ok to pull plug and retire?

Post by sunny_socal »

The better question is: what will I _do_ once I'm retired?
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Blister
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Re: ok to pull plug and retire?

Post by Blister »

:beer

Have a happy retirement.
Everthing works out in the end. If it doesn't then its not the end.
bluebolt
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Re: ok to pull plug and retire?

Post by bluebolt »

You certainly have the financial means to retire. Several of my friends/colleagues in the same position like working part time to feel engaged/productive.

Do you have a plan for what you're going to do when you're retired? No need to share it, just know that for many people it's important to have a plan/goals to help them have fulfillment in retirement.
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MikeWillRetire
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Re: ok to pull plug and retire?

Post by MikeWillRetire »

You may even have enough to survive a couple of divorces in retirement.
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El Greco
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Re: ok to pull plug and retire?

Post by El Greco »

Enough to retire? Either you're kidding or bragging...which is it?
CoAndy
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Re: ok to pull plug and retire?

Post by CoAndy »

I would retire today if I were you. Enjoy.
Topic Author
pivoprussia
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Re: ok to pull plug and retire?

Post by pivoprussia »

Thanks for the feedback...as I mentioned I felt I was good to go. However, this is a huge decision and the likelihood of
re-entering my field is relatively low once gone.

I asked on this site specifically given the great financial wisdom here. Perhaps I missed something big. . .it's not a mistake I care to make.
So no, not kidding or bragging, El Greco. :sharebeer
Biffer
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Re: ok to pull plug and retire?

Post by Biffer »

pivoprussia wrote:I asked on this site specifically given the great financial wisdom here. Perhaps I missed something big. . .it's not a mistake I care to make.
Sounds reasonable and prudent to me.

Enjoy the next chapter!
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onthecusp
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Re: ok to pull plug and retire?

Post by onthecusp »

I suspect the big thing you have been missing is confidence in safe withdrawal calculations and reasonable asset allocations. A few years ago I thought I was going to have to work forever because I couldn't accumulate the 3 million or more I thought I needed with expenses not so different from yours.

Firecalc, which you referenced, has changed my mind. But to become confident in it I've compared the results against other calculators, read a bunch of safe withdrawal threads here, done my own spreadsheets with greater and lesser complexity and more or less conservative assumptions. I have confidence in it now, and confidence that I will maintain the type of asset allocation that meets the assumptions I entered and that I can safety keep to a budget of expenses that also meet the assumptions. If you can do those last two things, I believe any possible calculation will show you have plenty. :sharebeer
dh
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Re: ok to pull plug and retire?

Post by dh »

pivoprussia wrote:Thanks for the feedback...as I mentioned I felt I was good to go. However, this is a huge decision and the likelihood of
re-entering my field is relatively low once gone.

I asked on this site specifically given the great financial wisdom here. Perhaps I missed something big. . .it's not a mistake I care to make.
So no, not kidding or bragging, El Greco. :sharebeer
Congratulation, Pivoprussia for reaching a point where you can choose (that is a powerful place to be!). However, you wrote something that may be more significant than the financial aspect of a retirement decision. Specifically, you wrote: "this is a huge decision and the likelihood of re-entering my field is relatively low." If your potential desire to re-enter your field was nil, then your finances may solely drive this decision. If that potential desire to re-enter your field is greater than zero (as implied in your statement), I would put the money aspect on the back burner, and focus on how your professional needs would be met if you do retire. Some people keep working to address psycho/social needs even after their financial needs are met. Regardless of what you decide just know you are in a powerful position to choose. Just my two cents....
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Soul.in.Progress
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Re: ok to pull plug and retire?

Post by Soul.in.Progress »

OP,

It looks to me that you have everything covered financially, cheers to a great retirement! :beer

As others have recommended, take the time to discover what areas of focus will nurture you and your family, whether that be focus on various combinations of family, health, volunteering, friends, faith, and/or hobbies of your choosing.
Start by doing what is necessary; | then do what is possible; | and suddenly you are doing the impossible. | -- Francis of Assisi
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Watty
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Re: ok to pull plug and retire?

Post by Watty »

In round numbers $10,000,000/50 years is $200,000 a year. If you can just keep up with inflation you will be fine.

Financially it is a slam dunk easy yes.

It would be good to have a clear vision of what your retirement will look like though. There will be few other people your age that are available to do things with and with young kids that are in school doing things like travel with them will need to be juggled around their school calendar.
pivoprussia wrote:Am I missing anything or I am good to go?
A couple of things;

Life insurance is mainly to insurance your future income in case you die. You may not need that anymore.

When the calculators like Firccalc say there is a chance of failure when you spend $200K a year it does not that you would blindly spend and end up broke and homeless, it means that you might have to cut back to $150K a year if things go badly.

You spending will be different at different ages, like when the kids are grown up and on their own. I have also seen relatives naturally slow down in their mid 70s and their spending really went down a lot while their health stayed relatively good for their age. With a paid off house other than food, utilities, and property taxes they have few other expenses since they didn't travel or even shop much anymore.

With your high expenses if you need a nursing home someday then your expenses could be about the same or even lower if you are not in a real expensive area.

No one plans on it but even if you have been married for a while there still a chance that you could get divorced and line on "just" five million dollars.

One option would be to continue working part time but use the extra funds to support a charity.
livesoft
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Re: ok to pull plug and retire?

Post by livesoft »

You are preparing for 60 years of retirement, so read this series to give you some more confidence:
https://earlyretirementnow.com/2016/12/ ... t-1-intro/
Wiki This signature message sponsored by sscritic: Learn to fish.
Good Listener
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Re: ok to pull plug and retire?

Post by Good Listener »

I am 20 years older than you and abruptly pulled the plug last year. No alarm clock and no boss. I wish I did 5 years earlier. You definitely have enough. Go for it. We only live once.
ModifiedDuration
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Re: ok to pull plug and retire?

Post by ModifiedDuration »

Livesoft - thank you for posting that link. There is a lot of very interesting material there.
toto238
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Re: ok to pull plug and retire?

Post by toto238 »

Here's a couple ways to think about it:

1. You could buy an inflation-adjusted annuity for about $5million that would guarantee you income of $200k per year for the rest of your life. For maybe $6million to keep going until both you and your spouse pass away. That is leaving $5million or so leftover for you to do whatever you want with.

2. You could put everything in to US government bonds yielding 2% right now, and at $200k per year your savings would last you into your 90s and most likely longer.

3. You could put everything into your checking account earning 0% interest, and your money would almost guaranteed last you well into your 80s at $200k per year.

There's not a lot of ways you could mess this up. It would be more difficult to try to think up of scenarios where you somehow couldn't retire. Maybe a complete economic collapse resulting in all currency becoming worthless? Having to pay for 10 organ transplants out of pocket in a row without any insurance?

Seriously, you're solid. Have a great retirement.
Rodc
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Re: ok to pull plug and retire?

Post by Rodc »

Is this an honest question or a humble brag?
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.
RAchip
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Re: ok to pull plug and retire?

Post by RAchip »

Having almost $11 million in investment and a $1.5mm home and a wife who does not work and two young kids AND spending only $150-$200k per year strikes me as unusual. In many places in the US, it would be very difficult to spend only $160k if you live the type of lifestyle most people who own a $1.5mm home live.
emoore
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Re: ok to pull plug and retire?

Post by emoore »

Rodc wrote:Is this an honest question or a humble brag?
+1

Crazy.
Topic Author
pivoprussia
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Re: ok to pull plug and retire?

Post by pivoprussia »

Great link, Livesoft. Thank you. Bookmarked.

I'm sorry a few of you take this as bragging. It is really not my purpose. From the survey it's pretty clear at least a few folks have significantly more than I. But I do appreciate that you feel I am humble. I do feel blessed for many reasons.

Retirement will be one of the biggest financial decisions in my life. It seems, and is, worth while to ask a group of financially savvy bogleheads if there is something big I am missing. I did not get to my place in life by being foolish. My decision does not hinge on the response of the forum but it is enlightening to read the responses.

My spending is what it is. I have been very successful yet frugal. I am known for this by friends and family. I grew up lower middle class - those lessons and memories of childhood have carried me far. As mentioned I do expect expenses for increase for a sundry of reasons.

Life after FIRE will be an adjustment. I have been mentally preparing myself for some time now by going PT. But it is an excellent point. FIRE is much more than just financial.

Thanks for all the well wishes and constructive comments.
artgerst
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Re: ok to pull plug and retire?

Post by artgerst »

Congrats! I agree that you are fine.

Two questions:

1) I'm sure others are wondering. How did you accumulate those assets? Business, investing, real estate?
2) Do you need term life insurance? Maybe a question for others as well. If you are "done" then that means you have enough without working so what's the term life insurance for?
Chicago60
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Re: ok to pull plug and retire?

Post by Chicago60 »

pivoprussia wrote:Great link, Livesoft. Thank you. Bookmarked.

I'm sorry a few of you take this as bragging. It is really not my purpose. From the survey it's pretty clear at least a few folks have significantly more than I. But I do appreciate that you feel I am humble. I do feel blessed for many reasons.

Retirement will be one of the biggest financial decisions in my life. It seems, and is, worth while to ask a group of financially savvy bogleheads if there is something big I am missing. I did not get to my place in life by being foolish. My decision does not hinge on the response of the forum but it is enlightening to read the responses.

My spending is what it is. I have been very successful yet frugal. I am known for this by friends and family. I grew up lower middle class - those lessons and memories of childhood have carried me far. As mentioned I do expect expenses for increase for a sundry of reasons.

Life after FIRE will be an adjustment. I have been mentally preparing myself for some time now by going PT. But it is an excellent point. FIRE is much more than just financial.

Thanks for all the well wishes and constructive comments.
As Bruce Springsteen sang, "poor man wanna be rich, rich man wanna be king." Those contemplating retirement with $1 million wish they had $2 million. Those with $2 million, wish they had $3 million. No matter how much we have, we wish we had a bit more to ease the analysis and decision. But, as others have said, you will be fine. The next question for you is how to keep as much as you can. Start looking into tax gain harvesting (those after tax accounts no doubt have large unrealized capital gains), and reallocating some of those investments to reduce dividend or other income. Contemplate converting those IRAs and 401Ks to Roth, and figure out how much per year.
beezquimby
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Re: ok to pull plug and retire?

Post by beezquimby »

disagree. We have a home valued at 1 mm (payed off), live in CA with two young children, and probably spend 60K a year.
RAchip wrote:Having almost $11 million in investment and a $1.5mm home and a wife who does not work and two young kids AND spending only $150-$200k per year strikes me as unusual. In many places in the US, it would be very difficult to spend only $160k if you live the type of lifestyle most people who own a $1.5mm home live.
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Abe
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Re: ok to pull plug and retire?

Post by Abe »

Chicago60 wrote: As Bruce Springsteen sang, "poor man wanna be rich, rich man wanna be king." Those contemplating retirement with $1 million wish they had $2 million. Those with $2 million, wish they had $3 million. No matter how much we have, we wish we had a bit more to ease the analysis and decision.
Rockefeller was at one point the world's richest man and first ever American billionaire. ... When a reporter asked him, "How much money is enough?" He responded, “Just a little bit more.” :happy
Slow and steady wins the race.
PVW
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Re: ok to pull plug and retire?

Post by PVW »

As you've stated your financial picture there is virtually no risk of failure. The biggest risk is that you've underestimated your spending. For example, taxes, a college fund, lifestyle creep, divorce, etc. But you still have significant padding in your savings, and presumably you have some skills that could be traded for money if your savings dwindle.
Topic Author
pivoprussia
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Re: ok to pull plug and retire?

Post by pivoprussia »

Thanks for more great replies.

1- about how much is enough: take the time to read What Happy People Know
https://www.amazon.com/What-Happy-Peopl ... eople+know
It is a common theme that no matter how much one has...more is better. The book addresses that and much more. One of the best books I have ever read. A partial driver in my motivation to walk away when I could continue to accumulate for material reasons alone.

2-Term life: I understand it's original purpose but the premiums are only $3360/year for $5m. The ILIT is already set up. So why not continue it?

3-how I got here: good fortunate and blessings. I do something rather specialized and I owned a very successful business for years. Both parts were essential. I then set a certain level of lifestyle and tried not to have it follow my income. We spend plenty but have no need for net jets, second homes, etc. Several nice national and international vacations per year are our splurges.
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dziuniek
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Re: ok to pull plug and retire?

Post by dziuniek »

Psshhh...

You can live of dividends, I bet.

Go for it.

I'm very very jealous.
Get rich or die tryin'
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gunn_show
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Re: ok to pull plug and retire?

Post by gunn_show »

RAchip wrote:Having almost $11 million in investment and a $1.5mm home and a wife who does not work and two young kids AND spending only $150-$200k per year strikes me as unusual. In many places in the US, it would be very difficult to spend only $160k if you live the type of lifestyle most people who own a $1.5mm home live.
In many places yes... in most of CA, no... for example: he could have either been an early GOOG employee with valuable shares/equity, founded a startup with an exit, any similar silicon valley unicorn success story... and in that area $1.5 is "average" if in SF or Atherton or Menlo or anywhere. And spending $150-200k would actually be a lot in that scenario tbh, as he could be just a regular guy with regular spending. Who knows what the OP's story is (he replied and gave some insight) but there are many plausible scenarios where his numbers make very much sense. Any WhatsApp, Instagram, Facebook, Snap, etc early employee could be in this scenario, bay area mints millionaires monthly (and all respects to OP, congrats, you won, just giving some BH's simple examples of how your story and numbers can be attained through success).
"The best life hack of all is to just put the work in and never give up." Bas Rutten
Tal-
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Re: ok to pull plug and retire?

Post by Tal- »

Hey OP,

I think your only risk of failure is a big bad happening. This could be anything from you making a bad timing decision, the markets crumbling with WWI, a major medical issue, really bad divorce, or so on. The biggest risk though is your spending - if your spending ramps up, all of the confidence shared on this thread will be for not. With all of that said, you're as secure as you can be - props.

Also - Ditch the life insurance.
Debt is to personal finance as a knife is to cooking.
basspond
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Re: ok to pull plug and retire?

Post by basspond »

Yes, as long as you have a plan for retirement. To satisfy any needs for career/work gratification, find a worthwhile charity to donate your talents. Enjoy your kids. You are getting to their most active years too.
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StevieG72
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Re: ok to pull plug and retire?

Post by StevieG72 »

Yes it is OK!

I would pull the plug yesterday with HALF of your assets!

Congratulations, enjoy your retirement!
Fools think their own way is right, but the wise listen to others.
Cash
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Re: ok to pull plug and retire?

Post by Cash »

livesoft wrote:You are preparing for 60 years of retirement, so read this series to give you some more confidence:
https://earlyretirementnow.com/2016/12/ ... t-1-intro/
Excellent series of posts. Thanks for the link.
Billionaire
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Re: ok to pull plug and retire?

Post by Billionaire »

pivoprussia wrote: Am I missing anything or I am good to go? TIA
Please, no gloating.
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