KF's Worst Case Retirement Plan [KlangFool's]

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KlangFool
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KF's Worst Case Retirement Plan [KlangFool's]

Post by KlangFool » Fri Jun 02, 2017 8:09 am

Folks,

This is my worst-case retirement scenario. Please review and criticize.

1) Retire at 54 years old with a portfolio of 1 million and the AA of 60/40

2) 300K Mortgage. 6 years into 30 years 3.49% fixed rate mortgage.

3) Taxable/Roth/Tax-deferred 45/10/45

4) Annual expense = 60K with the mortgage, 45K without the mortgage. Out of that 45K/60K, 20K is budgeted for medical expense.

5) I had passed the second bend point with social security. Below is my estimated social security income.

20K at 62 years old
29K at 67 years old
36K at 70 years old

Stay-at-home spouse received 50% of my social security income.

Thanks in advance.

KlangFool
Last edited by KlangFool on Tue Jun 13, 2017 8:41 am, edited 2 times in total.

livesoft
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Re: KF's Worst Case Retirement Plan

Post by livesoft » Fri Jun 02, 2017 8:33 am

OK, ...

You and your wife get sick at age 55. Medical expenses become $40,000 a year after insurance pays for everything else. And your property taxes go up to $20,000 a year. But, fortunately, your kids and other families members take care of you for the rest of your lives.
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KlangFool
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Re: KF's Worst Case Retirement Plan

Post by KlangFool » Fri Jun 02, 2017 8:43 am

livesoft wrote:OK, ...

You and your wife get sick at age 55. Medical expenses become $40,000 a year after insurance pays for everything else. And your property taxes go up to $20,000 a year. But, fortunately, your kids and other families members take care of you for the rest of your lives.
livesoft,

LOL!!

I can laugh about this because

A) Many of my family members are millionaires.

B) My family has a history of taking care of each other. For example, we, uncles and aunties, sponsored many of our nephews and nieces through colleges.

KlangFool

livesoft
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Re: KF's Worst Case Retirement Plan

Post by livesoft » Fri Jun 02, 2017 8:45 am

I knew your family would come through for you, so that's why I mentioned them.
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KlangFool
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Re: KF's Worst Case Retirement Plan

Post by KlangFool » Fri Jun 02, 2017 8:46 am

livesoft wrote:I knew your family would come through for you, so that's why I mentioned them.
livesoft,

Thanks. Let's get back to the main topic and assuming that I need to do it alone. Would the number work?

KlangFool

smitcat
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Re: KF's Worst Case Retirement Plan

Post by smitcat » Fri Jun 02, 2017 9:06 am

KlangFool -I have appreciated your posts greatly, they have been very helpful.

"This is my worst-case retirement scenario. Please review and criticize."

Doing it on your own and the math works out pretty well - so my thoughts for you are similar to my thoughts for my wife and I.
That is it is too tight of a budget because we will have much time to live and grow during retirement and that will affect our desire to be able to spend greatly. IMHO - budgeting $40K total for yearly expenses become the potential problem in the future for many reasons including but not limited to:
- unexpected health needs as you get older
- desire to help children with major events (marriage, homes, heath, their children, further education)
- travel for any reason
- fixed costs changes outside of your control (tax, fuel, insurances, natural disaster costs, etc)
- car and or transportation costs
- Desire to go back to school for learning/experiences rather than a job
- wanting to pursue a hobby in a larger way (Tia Chi with a master in their location)
- being able to donate time and funds to a cause you feel strongly about

The great opportunity of retirement and time is that we continue to learn and grow and so the liability with that growth will become the expansion of costs to follow those dreams. I know for a fact that we will not run into all of the above, but I also know we will run into at least a few. So for that reason our plans need to include a reasonable margin for those occurrences which we hope and know will be part of the retirement.

livesoft
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Re: KF's Worst Case Retirement Plan

Post by livesoft » Fri Jun 02, 2017 9:16 am

I don't think that would work. I think your expenses are underestimated.
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ryman554
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Re: KF's Worst Case Retirement Plan

Post by ryman554 » Fri Jun 02, 2017 9:20 am

You are pushing it (greatly) with 60k of expenses and 1M portfolio with that bridge to SS and the relatively conservative 60/40 portfolio.

I'd advocate for closer to 1.4M, but you also have SS coming up relatively soon: once you get to 62 with your 1M intact you should be more than OK. At 62 with 520k left (kinda worst case for you, assuming 0% real)... yikes.

This is actually the math I'm going to struggle with -- how to account for safety when there is a bolus of income coming when I get older. Ignore that SS and I oversave. Don't ignore, but guarantee via TIPS stream, comes out about the same.

dbr
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Re: KF's Worst Case Retirement Plan

Post by dbr » Fri Jun 02, 2017 9:22 am

What do the retirement models you could run say? I ran one example and got one possible answer.

indexonlyplease
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Re: KF's Worst Case Retirement Plan

Post by indexonlyplease » Fri Jun 02, 2017 9:29 am

Not Enough.

Last year I decided to retire at 52. I have a larger portfolio but the only comfort was the pension I recieve for life with a cola. Also, my wife still works so we still max out our Roth IRA. I was also able to maintain the same insurance but do pay more.

So unless your wife will continue to work I would state no.

I think the idea of early retirement is that you go back to work if you want to not because you have to. Something I am looking into after taking off one year.

letsgobobby
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Re: KF's Worst Case Retirement Plan

Post by letsgobobby » Fri Jun 02, 2017 9:29 am

your worst case scenario definitely does not work in a worst case scenario.

UncleBen
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Re: KF's Worst Case Retirement Plan

Post by UncleBen » Fri Jun 02, 2017 9:40 am

You are proposing a 6% WD rate for 8 years until SS, then probably continuing at about 6% withdrawing $30k from the remaining $520 or so? It sounds risky to me. Without the mortgage it would be more acceptable. But otherwise early retirement doesn't sound like great idea (unless there is a pension you aren't telling us about).

FoolMeOnce
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Re: KF's Worst Case Retirement Plan

Post by FoolMeOnce » Fri Jun 02, 2017 9:52 am

UncleBen wrote:You are proposing a 6% WD rate for 8 years until SS, then probably continuing at about 6% withdrawing $30k from the remaining $520 or so? It sounds risky to me. Without the mortgage it would be more acceptable. But otherwise early retirement doesn't sound like great idea (unless there is a pension you aren't telling us about).
This assumes no growth over those 8 years. Which is possible, but not how you'd calculate what is left after 8 years. Though if calculating a worst case scenario, you might want to go even lower...

KlangFool
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Re: KF's Worst Case Retirement Plan

Post by KlangFool » Fri Jun 02, 2017 10:06 am

livesoft wrote:I don't think that would work. I think your expenses are underestimated.
livesoft,

I understand your sentiment. But, this is the number that I lived with for the past 10+ years. I saved 30+% of my gross income and lived with the rest.

KlangFool

KlangFool
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Re: KF's Worst Case Retirement Plan

Post by KlangFool » Fri Jun 02, 2017 10:08 am

smitcat wrote:KlangFool -I have appreciated your posts greatly, they have been very helpful.

"This is my worst-case retirement scenario. Please review and criticize."

Doing it on your own and the math works out pretty well - so my thoughts for you are similar to my thoughts for my wife and I.
That is it is too tight of a budget because we will have much time to live and grow during retirement and that will affect our desire to be able to spend greatly. IMHO - budgeting $40K total for yearly expenses become the potential problem in the future for many reasons including but not limited to:
- unexpected health needs as you get older
- desire to help children with major events (marriage, homes, heath, their children, further education)
- travel for any reason
- fixed costs changes outside of your control (tax, fuel, insurances, natural disaster costs, etc)
- car and or transportation costs
- Desire to go back to school for learning/experiences rather than a job
- wanting to pursue a hobby in a larger way (Tia Chi with a master in their location)
- being able to donate time and funds to a cause you feel strongly about

The great opportunity of retirement and time is that we continue to learn and grow and so the liability with that growth will become the expansion of costs to follow those dreams. I know for a fact that we will not run into all of the above, but I also know we will run into at least a few. So for that reason our plans need to include a reasonable margin for those occurrences which we hope and know will be part of the retirement.
smitcat,

Thank you for your feedback.

KlangFool

KlangFool
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Re: KF's Worst Case Retirement Plan

Post by KlangFool » Fri Jun 02, 2017 10:09 am

UncleBen wrote:You are proposing a 6% WD rate for 8 years until SS, then probably continuing at about 6% withdrawing $30k from the remaining $520 or so? It sounds risky to me. Without the mortgage it would be more acceptable. But otherwise early retirement doesn't sound like great idea (unless there is a pension you aren't telling us about).
UncleBen,

I may be forced into early retirement. I may not have a choice.

KlangFool

renue74
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Re: KF's Worst Case Retirement Plan

Post by renue74 » Fri Jun 02, 2017 10:10 am

Just like with any "to the end of time" planning....it takes out the peaks and valleys of life.

What if the portfolio get's hit with a recession? Well...the OP will reconfig his withdrawals.

What if there are higher expenses than estimated? Well...the OP will sell his house and downsize, injecting some capital into the portfolio and reducing annual expenses.

What if the OP gets bored during retirement AND his portfolio is getting beat up? He'll go to work at Home Depot part time to get out of the house.

I have friends have 10% of what the OP have and they are in their late 40s/early 50s. Those are the people you tell "no you can't retire until you can get SS or pensions."

The guy lives frugally and most likely he's smart enough to roll with the punches of life.

adamthesmythe
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Re: KF's Worst Case Retirement Plan

Post by adamthesmythe » Fri Jun 02, 2017 10:12 am

At this political moment health care insurance for early retirees are your biggest uncertainty.

KlangFool
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Re: KF's Worst Case Retirement Plan

Post by KlangFool » Fri Jun 02, 2017 10:14 am

adamthesmythe wrote:At this political moment health care insurance for early retirees are your biggest uncertainty.
I agreed.

KlangFool

KlangFool
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Re: KF's Worst Case Retirement Plan

Post by KlangFool » Fri Jun 02, 2017 10:17 am

renue74 wrote:Just like with any "to the end of time" planning....it takes out the peaks and valleys of life.

What if the portfolio get's hit with a recession? Well...the OP will reconfig his withdrawals.

What if there are higher expenses than estimated? Well...the OP will sell his house and downsize, injecting some capital into the portfolio and reducing annual expenses.

What if the OP gets bored during retirement AND his portfolio is getting beat up? He'll go to work at Home Depot part time to get out of the house.

I have friends have 10% of what the OP have and they are in their late 40s/early 50s. Those are the people you tell "no you can't retire until you can get SS or pensions."

The guy lives frugally and most likely he's smart enough to roll with the punches of life.
renue74,

Thanks. My alternate plan for if the number does not work out is to retire to my lower cost home country. Or, sell the house and move to lower cost part of the USA.

KlangFool

KlangFool
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Re: KF's Worst Case Retirement Plan

Post by KlangFool » Fri Jun 02, 2017 10:20 am

Folks,

For those that believe that 1 million at 54 years old does not work out, please let me about the number that you will be comfortable with. The number should be lower than 1.5 million. That is the highest achievable number for me.

KlangFool

MrDrinkingWater
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Re: KF's Worst Case Retirement Plan

Post by MrDrinkingWater » Fri Jun 02, 2017 10:27 am

Having a particular employment end in a forced retirement may be an unwelcome scenario, but would you otherwise be prevented from seeking another local job that you might do for just two or more years, and then retire with a little more cushion?

You have an admirable low cost of living lifestyle, and you may be able to sustain it. I think you should have a little more cushion that another year or two of full-time employment might provide.
Last edited by MrDrinkingWater on Fri Jun 02, 2017 10:29 am, edited 1 time in total.

fourniks
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Re: KF's Worst Case Retirement Plan

Post by fourniks » Fri Jun 02, 2017 10:28 am

KF:

The $20k/year for medical sounds high to me (at least for now). Is that for a HDHP assuming both you and your wife are in good health?

I think you are close. I would think that the biggest threat would be sequence of return risk in your bridge. You have essentially two bridges to pass: 54 to 59.5; and 59.5 to SS.

Couple thoughts:

Is it possible to set aside 2 or 3 years in cash (CDs) to deal with a down or significant drop in market/equities during the bridge(s)?

Is it possible to work 1 more year to gain access to yours or your wife's 401k at 55 through Rule of 55 (assuming favorable distribution option from employers)?

fourniks

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jimb_fromATL
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Re: KF's Worst Case Retirement Plan

Post by jimb_fromATL » Fri Jun 02, 2017 10:31 am

KlangFool wrote:
1) Retire at 54 years 5) I had passed the second bend point with social security. Below is my estimated social security income.

20K at 62 years old
29K at 67 years old
36K at 70 years old
Don't overlook that the social security estimates from the SSA are based on continuing to have your current income and SS contributions until retirement age. They use the average of the highest 35 years. If you have fewer than 35 years, some years will be zeros, or else several of the years in the average will be from earlier years when you probably made a lot less money. example

Also consider that if you still have a mortgage, the effective rate will be higher because you're less likely to get much if any tax deduction when your income is lower.

On the other hand, you don't pay FICA tax on retirement income, so it doesn't take quite as much income to have the same net.

jimb

renue74
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Re: KF's Worst Case Retirement Plan

Post by renue74 » Fri Jun 02, 2017 10:33 am

KlangFool wrote:
renue74 wrote:Just like with any "to the end of time" planning....it takes out the peaks and valleys of life.

What if the portfolio get's hit with a recession? Well...the OP will reconfig his withdrawals.

What if there are higher expenses than estimated? Well...the OP will sell his house and downsize, injecting some capital into the portfolio and reducing annual expenses.

What if the OP gets bored during retirement AND his portfolio is getting beat up? He'll go to work at Home Depot part time to get out of the house.

I have friends have 10% of what the OP have and they are in their late 40s/early 50s. Those are the people you tell "no you can't retire until you can get SS or pensions."

The guy lives frugally and most likely he's smart enough to roll with the punches of life.
renue74,

Thanks. My alternate plan for if the number does not work out is to retire to my lower cost home country. Or, sell the house and move to lower cost part of the USA.

KlangFool
Judging from your screen name...Malaysia....Klang Valley area.

I follow tons of Youtubers living in Thailand (Chiang Mai, Pattaya, etc.) on the cheap. I'm 99% sure my wife would never go for doing that, but I would definitely love to visit for extended periods. That area of the world is so beautiful and the food fantastic.

KlangFool
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Re: KF's Worst Case Retirement Plan

Post by KlangFool » Fri Jun 02, 2017 10:33 am

MrDrinkingWater wrote:Having a particular employment end in a forced retirement may be an unwelcome scenario, but would you otherwise be prevented from seeking another local job that you might do for just two or more years, and then retire with a little more cushion?

You have an admirable low cost of living lifestyle, and you may be able to sustain it. I think you should have a little more cushion that another year or two of full-time employment might provide.
MrDrinkingWater,

I was unemployed for more than 1 year before current employment. And, I am in my current job for less than 2 years. So, I am well aware of my employability. Essentially, it is a hit or miss.

A) Not many jobs out there for me

B) For those jobs that need me, there are not many out there that can fill the position.

KlangFool

KlangFool
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Re: KF's Worst Case Retirement Plan

Post by KlangFool » Fri Jun 02, 2017 10:36 am

jimb_fromATL wrote:
KlangFool wrote:
1) Retire at 54 years 5) I had passed the second bend point with social security. Below is my estimated social security income.

20K at 62 years old
29K at 67 years old
36K at 70 years old
Don't overlook that the social security estimates from the SSA are based on continuing to have your current income and SS contributions until retirement age. They use the average of the highest 35 years. If you have fewer than 35 years, some years will be zeros, or else several of the years in the average will be from earlier years when you probably made a lot less money. example

Also consider that if you still have a mortgage, the effective rate will be higher because you're less likely to get much if any tax deduction when your income is lower.

On the other hand, you don't pay FICA tax on retirement income, so it doesn't take quite as much income to have the same net.

jimb
jimb,

You are correct about the social security income estimate in general. But, in my case, I had crossed the second bend point even with many years of zeroes. So, the estimates will be very close.

KlangFool

KlangFool
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Re: KF's Worst Case Retirement Plan

Post by KlangFool » Fri Jun 02, 2017 10:42 am

fourniks wrote:KF:

The $20k/year for medical sounds high to me (at least for now). Is that for a HDHP assuming both you and your wife are in good health?

I think you are close. I would think that the biggest threat would be sequence of return risk in your bridge. You have essentially two bridges to pass: 54 to 59.5; and 59.5 to SS.

Couple thoughts:

Is it possible to set aside 2 or 3 years in cash (CDs) to deal with a down or significant drop in market/equities during the bridge(s)?

Is it possible to work 1 more year to gain access to yours or your wife's 401k at 55 through Rule of 55 (assuming favorable distribution option from employers)?

fourniks
fourniks,

1) I am very conservative with my expense estimate. The 20K medical expense is assuming HDRP plan and maximum out of pocket payment.

<< Is it possible to set aside 2 or 3 years in cash (CDs) to deal with a down or significant drop in market/equities during the bridge(s)?>>

2) I have 1 year worth of emergency fund and my portfolio is designed for surviving an unemployment period of 5 years without selling any stock.

KlangFool

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tc101
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Re: KF's Worst Case Retirement Plan

Post by tc101 » Fri Jun 02, 2017 10:43 am

Do you enjoy your work or hate it? I think that is a major consideration.

What if you decide to work an extra 5 years at a job you are sick of to make sure you will have plenty of money when you are 80 and then you die before you retire?

You will not be homeless at 80. By retiring early you just risk lowering your standard of living a bit when you get older. If you don't enjoy your work, I think that it is a good risk to take.

Someone mentioned all the expensive things you might want to do when you retire. How much more happiness will those expensive things give you? Once you have the basics covered a wonderful life is based more on your creativity than your wealth. I feel like I am living a dream life, retired and healthy at age 67, on very little money. I read a lot of books I get out of the library for free. I go to chess clubs for free. I am taking piano lessons for $100 a month and practicing on a $400 electric piano. I do volunteer work that is lots of fun. I watch movies on netflix for a low cost. I practice Buddhist meditation for free. I work out at a nice gym for $35/month. All this is cheap and very enjoyable. More money would not make me much happier.

Life if full of risks. In the end we are all dead. It might be a reasonable risk for you to retire early if you don't enjoy your work.
Last edited by tc101 on Fri Jun 02, 2017 10:46 am, edited 1 time in total.
. | The most important thing you should know about me is that I am not an expert.

KlangFool
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Re: KF's Worst Case Retirement Plan

Post by KlangFool » Fri Jun 02, 2017 10:45 am

renue74 wrote:
KlangFool wrote:
renue74 wrote:Just like with any "to the end of time" planning....it takes out the peaks and valleys of life.

What if the portfolio get's hit with a recession? Well...the OP will reconfig his withdrawals.

What if there are higher expenses than estimated? Well...the OP will sell his house and downsize, injecting some capital into the portfolio and reducing annual expenses.

What if the OP gets bored during retirement AND his portfolio is getting beat up? He'll go to work at Home Depot part time to get out of the house.

I have friends have 10% of what the OP have and they are in their late 40s/early 50s. Those are the people you tell "no you can't retire until you can get SS or pensions."

The guy lives frugally and most likely he's smart enough to roll with the punches of life.
renue74,

Thanks. My alternate plan for if the number does not work out is to retire to my lower cost home country. Or, sell the house and move to lower cost part of the USA.

KlangFool
Judging from your screen name...Malaysia....Klang Valley area.

I follow tons of Youtubers living in Thailand (Chiang Mai, Pattaya, etc.) on the cheap. I'm 99% sure my wife would never go for doing that, but I would definitely love to visit for extended periods. That area of the world is so beautiful and the food fantastic.
renue74,

My wife is from the same area. Plus, half of our family is still over there. So, this is not a problem for us.

KlangFool

KlangFool
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Re: KF's Worst Case Retirement Plan

Post by KlangFool » Fri Jun 02, 2017 10:49 am

tc101 wrote:
Do you enjoy your work or hate it? I think that is a major consideration.
tc101,

I am not one of those that have the choice. Due to age discrimination, I may be permanently unemployed if I lose the current one. Many of my peers in the 40s and 50s are permanently under-employed and unemployed.

To answer your question, I worked from home and I like my job. I just do not know how long it will last.

KlangFool

IlliniDave
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Re: KF's Worst Case Retirement Plan

Post by IlliniDave » Fri Jun 02, 2017 10:56 am

That's a tough scenario to navigate. Without the mortgage I think you could swing it assuming your medical expenses didn't hit $20K every single year.

Considering alternate, lower wage, maybe even part-time employment for a few years might help bridge that gap until SS. Good luck, hope this doesn't get forced on you too soon.
Don't do something. Just stand there!

aristotelian
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Re: KF's Worst Case Retirement Plan

Post by aristotelian » Fri Jun 02, 2017 11:00 am

If $1m plus SS can take care of normal expenses, then you just need a plan for health care. Either save some extra money to have in case you need it, make a plan to move to another country and make sure you have the budget, or budget private insurance. Would $100k be a reasonable emergency fund for an early retiree?

smitcat
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Re: KF's Worst Case Retirement Plan

Post by smitcat » Fri Jun 02, 2017 11:01 am

My brother spends about 10 months each year in Thailand two trips an year for the past 6-7 years.
His costs have been pretty low and controllable and he has some funds established over there now for quite some time.
As shown by his actions he absolutely loves the country....
The recent politics there have him very concerned and rethinking his longer range plans.

delamer
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Re: KF's Worst Case Retirement Plan

Post by delamer » Fri Jun 02, 2017 11:05 am

Based on your previous posts, I am less skeptical than some others that you can live on $40,000 per year. In my bare bones budget, my husband and I could get by on about $45,000 including income taxes. However, we have access to inexpensive retiree health insurance, so we have more allocated to other budget items.

Your early retirement success is dependent on two factors -- the behavior of the stock/bond markets and how much your medical expenses actually are. You can't really adjust the rest of your spending because it is so basic.

In your position, I'd want to be sure that I could get to age 62 (Social Security) without touching my nest egg of $700,000 after I paid off the mortgage. That way, even in an awful scenario of an early 50% plunge in your asset values followed by a flat market, you'd have enough to get by at 62.

So I would want to have an additional $320,000 in cash/short term bonds to cover my pre-Social Security period. This accounts for the scenario that you'd need all $20,000 for medical. A total of $1,320,000 is workable for you, correct?

Obviously, you would reassess when you get to 62 to determine if you can delay SS further. (If you are under age 50 now, you might want to factor in possibly less generous SS benefits. If you are over 50, that should not be a concern.)

panhead
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Re: KF's Worst Case Retirement Plan

Post by panhead » Fri Jun 02, 2017 11:08 am

KlangFool wrote:Folks,

For those that believe that 1 million at 54 years old does not work out, please let me about the number that you will be comfortable with. The number should be lower than 1.5 million. That is the highest achievable number for me.

KlangFool
Well, yeah, I think 1.5M would do the trick. If I take the numbers at face value, you have 1.5M - 300k to pay mortgage, now 1.2M
40k/1.2M = SWR of 3.33%

This should be very safe for the minimum of 8 years you need until you "could" start collecting SS.

I think this would be my goal.

KlangFool
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Re: KF's Worst Case Retirement Plan

Post by KlangFool » Fri Jun 02, 2017 11:12 am

IlliniDave wrote:That's a tough scenario to navigate. Without the mortgage I think you could swing it assuming your medical expenses didn't hit $20K every single year.

Considering alternate, lower wage, maybe even part-time employment for a few years might help bridge that gap until SS. Good luck, hope this doesn't get forced on you too soon.
IlliniDave,

I have about 100K home equity that is not part of the 1 million. So, I could sell the house and free up some of the money if needed.

KlangFool

smitcat
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Re: KF's Worst Case Retirement Plan

Post by smitcat » Fri Jun 02, 2017 11:14 am

KlangFool wrote:
tc101 wrote:
Do you enjoy your work or hate it? I think that is a major consideration.
tc101,

I am not one of those that have the choice. Due to age discrimination, I may be permanently unemployed if I lose the current one. Many of my peers in the 40s and 50s are permanently under-employed and unemployed.

To answer your question, I worked from home and I like my job. I just do not know how long it will last.

KlangFool

We have recently discovered that there are a number if jobs with homeland security and the port authority that have lower but reason able salaries but full health care coverage. Many of these are adjacent to lower costs areas in the southeast where we have looked - this could be one of a few ideas on how to bridge a potential gap in both funds and health care. Others may include teaching, offshore representation for larger companies and translating positions.

KlangFool
Posts: 10392
Joined: Sat Oct 11, 2008 12:35 pm

Re: KF's Worst Case Retirement Plan

Post by KlangFool » Fri Jun 02, 2017 11:14 am

aristotelian wrote:If $1m plus SS can take care of normal expenses, then you just need a plan for health care. Either save some extra money to have in case you need it, make a plan to move to another country and make sure you have the budget, or budget private insurance. Would $100k be a reasonable emergency fund for an early retiree?
aristotelian,

My current emergency fund is about 90K. 1 years of expense plus the half year of college cost for 2 kids.

KlangFool

KlangFool
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Joined: Sat Oct 11, 2008 12:35 pm

Re: KF's Worst Case Retirement Plan

Post by KlangFool » Fri Jun 02, 2017 11:17 am

smitcat wrote:
KlangFool wrote:
tc101 wrote:
Do you enjoy your work or hate it? I think that is a major consideration.
tc101,

I am not one of those that have the choice. Due to age discrimination, I may be permanently unemployed if I lose the current one. Many of my peers in the 40s and 50s are permanently under-employed and unemployed.

To answer your question, I worked from home and I like my job. I just do not know how long it will last.

KlangFool

We have recently discovered that there are a number if jobs with homeland security and the port authority that have lower but reason able salaries but full health care coverage. Many of these are adjacent to lower costs areas in the southeast where we have looked - this could be one of a few ideas on how to bridge a potential gap in both funds and health care. Others may include teaching, offshore representation for larger companies and translating positions.
smitcat,

Yes, but I could retire to my home country with full health care at around 20K to 30K per year. So, why work?

KlangFool

Jack FFR1846
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Re: KF's Worst Case Retirement Plan

Post by Jack FFR1846 » Fri Jun 02, 2017 11:20 am

I make it a math problem with "worst case" future expenses. For me, the future expenses are kid's school expenses and then health care. I don't think $20k/yr going forward is out of line with expectations. Our family paid over $13k last year and that's after our employer provided insurance paid their part.

First number.....What you'll spend (include health care and any other costs....car....roof....everything).

Next, subtract SS, pension, other income. (this might have to be a 2 step process with no SS, no pension until the age you plan to take them, then a new calculation with those incomes included).

Multiply by your favorite number. If you like 4%, use 25. I'm very "scared" so use a much bigger number...like 50 (2.5%).

"to me", your number is too small. "to me", $1.5M is too small. But I'm pretty "scared".
Bogle: Smart Beta is stupid

KlangFool
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Re: KF's Worst Case Retirement Plan

Post by KlangFool » Fri Jun 02, 2017 11:32 am

delamer wrote:Based on your previous posts, I am less skeptical than some others that you can live on $40,000 per year. In my bare bones budget, my husband and I could get by on about $45,000 including income taxes. However, we have access to inexpensive retiree health insurance, so we have more allocated to other budget items.
delamer,

<<However, we have access to inexpensive retiree health insurance, >>

I would qualify for that if I stay at current job until 57 years old and the employer did not cancel this benefit at that time. But, this is a few years from now.

KlangFool

KlangFool
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Re: KF's Worst Case Retirement Plan

Post by KlangFool » Fri Jun 02, 2017 11:36 am

Jack FFR1846 wrote:
I make it a math problem with "worst case" future expenses. For me, the future expenses are kid's school expenses and then health care. I don't think $20k/yr going forward is out of line with expectations. Our family paid over $13k last year and that's after our employer provided insurance paid their part.
Jack FFR1846,

All my kids will be out of college in 3 years. I have 1.2 million now. The 200K is reserved for their college expenses over the next 3 years. As per retirement, I have 1 million at 54 years old.

KlangFool

delamer
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Re: KF's Worst Case Retirement Plan

Post by delamer » Fri Jun 02, 2017 11:42 am

KlangFool wrote:
delamer wrote:Based on your previous posts, I am less skeptical than some others that you can live on $40,000 per year. In my bare bones budget, my husband and I could get by on about $45,000 including income taxes. However, we have access to inexpensive retiree health insurance, so we have more allocated to other budget items.
delamer,

<<However, we have access to inexpensive retiree health insurance, >>

I would qualify for that if I stay at current job until 57 years old and the employer did not cancel this benefit at that time. But, this is a few years from now.

KlangFool
I hope that you are able to stay until you qualify, and that the benefit is continued.

I have a pension and the retiree insurance, and the insurance is as valuable as the pension.

KlangFool
Posts: 10392
Joined: Sat Oct 11, 2008 12:35 pm

Re: KF's Worst Case Retirement Plan

Post by KlangFool » Fri Jun 02, 2017 11:45 am

Folks,

I like my job and I have a good job. But, I have no job security. I would enjoy my job much better if I know that I had reached my FI number. Aka, I do not need the job anymore. So, this thread/topic is to help me exploit and understand what that number is.

My number is growing about 100K per year for every additional year that I work.

KlangFool

KlangFool
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Re: KF's Worst Case Retirement Plan

Post by KlangFool » Fri Jun 02, 2017 11:46 am

delamer wrote:
KlangFool wrote:
delamer wrote:Based on your previous posts, I am less skeptical than some others that you can live on $40,000 per year. In my bare bones budget, my husband and I could get by on about $45,000 including income taxes. However, we have access to inexpensive retiree health insurance, so we have more allocated to other budget items.
delamer,

<<However, we have access to inexpensive retiree health insurance, >>

I would qualify for that if I stay at current job until 57 years old and the employer did not cancel this benefit at that time. But, this is a few years from now.

KlangFool
I hope that you are able to stay until you qualify, and that the benefit is continued.

I have a pension and the retiree insurance, and the insurance is as valuable as the pension.
I hope so but I cannot count on it. The IT world is too volatile and we are in a major paradigm shift.

KlangFool

smitcat
Posts: 1977
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Re: KF's Worst Case Retirement Plan

Post by smitcat » Fri Jun 02, 2017 12:05 pm

KlangFool wrote:
smitcat wrote:
KlangFool wrote:
tc101 wrote:
Do you enjoy your work or hate it? I think that is a major consideration.
tc101,

I am not one of those that have the choice. Due to age discrimination, I may be permanently unemployed if I lose the current one. Many of my peers in the 40s and 50s are permanently under-employed and unemployed.

To answer your question, I worked from home and I like my job. I just do not know how long it will last.

KlangFool

We have recently discovered that there are a number if jobs with homeland security and the port authority that have lower but reason able salaries but full health care coverage. Many of these are adjacent to lower costs areas in the southeast where we have looked - this could be one of a few ideas on how to bridge a potential gap in both funds and health care. Others may include teaching, offshore representation for larger companies and translating positions.
smitcat,

Yes, but I could retire to my home country with full health care at around 20K to 30K per year. So, why work?

KlangFool
I guess with your knowledge of your home country and the data you have just posted my question would be why are you not there already?
20-30 / full heath care / a location you know well and like - do those facts not make the rest of this post a worthless excercise?

KlangFool
Posts: 10392
Joined: Sat Oct 11, 2008 12:35 pm

Re: KF's Worst Case Retirement Plan

Post by KlangFool » Fri Jun 02, 2017 12:13 pm

smitcat wrote:
I guess with your knowledge of your home country and the data you have just posted my question would be why are you not there already?
20-30 / full heath care / a location you know well and like - do those facts not make the rest of this post a worthless excercise?
smitcat,

1) My kids are in college. We cannot leave for the next 3 years.

2) My portfolio is growing 100K per year as long as I am employed.

3) My wife would like to take care of her elder mother living in this area.

KlangFool

smitcat
Posts: 1977
Joined: Mon Nov 07, 2016 10:51 am

Re: KF's Worst Case Retirement Plan

Post by smitcat » Fri Jun 02, 2017 12:17 pm

KlangFool wrote:
smitcat wrote:
I guess with your knowledge of your home country and the data you have just posted my question would be why are you not there already?
20-30 / full heath care / a location you know well and like - do those facts not make the rest of this post a worthless excercise?
smitcat,

1) My kids are in college. We cannot leave for the next 3 years.

2) My portfolio is growing 100K per year as long as I am employed.

3) My wife would like to take care of her elder mother living in this area.

KlangFool

Respectfully given those 3 constraints my thoughts would be.....
We have recently discovered that there are a number if jobs with homeland security and the port authority that have lower but reason able salaries but full health care coverage. Many of these are adjacent to lower costs areas in the southeast where we have looked - this could be one of a few ideas on how to bridge a potential gap in both funds and health care. Others may include teaching, offshore representation for larger companies and translating positions.

KlangFool
Posts: 10392
Joined: Sat Oct 11, 2008 12:35 pm

Re: KF's Worst Case Retirement Plan

Post by KlangFool » Fri Jun 02, 2017 12:22 pm

smitcat wrote:
KlangFool wrote:
smitcat wrote:
I guess with your knowledge of your home country and the data you have just posted my question would be why are you not there already?
20-30 / full heath care / a location you know well and like - do those facts not make the rest of this post a worthless excercise?
smitcat,

1) My kids are in college. We cannot leave for the next 3 years.

2) My portfolio is growing 100K per year as long as I am employed.

3) My wife would like to take care of her elder mother living in this area.

KlangFool

Respectfully given those 3 constraints my thoughts would be.....
We have recently discovered that there are a number if jobs with homeland security and the port authority that have lower but reason able salaries but full health care coverage. Many of these are adjacent to lower costs areas in the southeast where we have looked - this could be one of a few ideas on how to bridge a potential gap in both funds and health care. Others may include teaching, offshore representation for larger companies and translating positions.
smitcat,

As per my understanding, if I move away from the state of Virginia, my kids would have to pay out-of-state tuition. That would double their tuition cost. That cost increase would be at least 30K per year.

KlangFool

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