Can I retire?

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fly66guy
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Joined: Thu Jan 25, 2018 7:24 pm

Can I retire?

Post by fly66guy » Thu Jan 25, 2018 7:54 pm

52 YO, single, no kids. Tech professional, Pharma industry, current salary 125K/year.
Very low cost southern metro area. If relocate will be to same or lower cost area.
Home owned outright, no debt of any kind, 1 x 4 year old car
Would like to do light handyman, gofer type work going forward. Dog walk, tutor, paint a room, etc...
Biggest fear = health care costs. No option for retiree health insurance.

Retirement Funds - Vanguard, index funds
RothIRA: 120,000 = 60/40 500Index/Total Bond
RolloverIRA: 220,000 = same mix
401K: 475,000 = 60/40 = same mix

Non-retirement - Vanguard, Index funds
75,000 500Index
60,000 Midcap Index
50,000 Smallcap index

Non-retirement, cash
75,000 MM @ 1.0%
150,000 CDs @ 3.0%
150,000 CDs @ 1.4%

Defined pension from previous employer will bring in about 400/moth starting age 65.

LarryAllen
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Location: State of Confusion

Re: Can I retire?

Post by LarryAllen » Thu Jan 25, 2018 8:01 pm

Question is how much do you anticipate spending and how much your handyman/gofer work might bring in.

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Nestegg_User
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Re: Can I retire?

Post by Nestegg_User » Thu Jan 25, 2018 8:39 pm

So basically: 1.4 mil; age early 50’s so really should use max of 3.0-3.5 (let’s be generous and say 3.5%) and that gives $49k ... so you’d basically go down to under 40% of your current total comp until the other ~5k (assuming it’s not COLA’d) rolls in and also have to fully fund any health insurance (at least it’s not also for family)
while you’d likely be able to get a subsidy under ACA. (don’t get us started on that, or else the thread will get locked)....

I’m thinking that it might be doable, but could be close— it all depends on your costs and how you would be able to handle repairs to your (paid off) house, say new roof or A/C unit, or other one offs. The lack of other income and needing 10-12 years before SS leaves you significantly at risk of sequence of returns risk. see other threads for discussion on that WRT current valuations and political (domestic and international) conditions

I’m assuming you have 35 years of SS so that additional years only replace earlier adjusted years and therefore wouldn’t move the needle much AFA the SS you’d receive
if not, that would be another consideration to soldier on

Agree that health insurance is your biggest concern , that’s why I waited until we had HI for life in retirement until I retired. (i am assuming that even if you waited you still had to get insurance through exchange/open market)
Last edited by Nestegg_User on Thu Jan 25, 2018 8:51 pm, edited 1 time in total.

TravelGeek
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Re: Can I retire?

Post by TravelGeek » Thu Jan 25, 2018 8:44 pm

So you have

Tax Free (Roth): $120,000
Tax Deferred (IRA, 401k): $695,000
Taxable: $560,000

Total: $1,375,000 (3% would be $41,250, 4% would be $55,000)

$4,800 annual pension (COL adjusted?)

Social Security?

Anticipated expenses?

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Nestegg_User
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Joined: Wed Aug 05, 2009 1:26 pm

Re: Can I retire?

Post by Nestegg_User » Thu Jan 25, 2018 8:52 pm

travelgeek

4% might be too aggressive for the early 50’s (35-40 year expected retirement) hence why I used 3.5% to get the 49k


the good news was paid off house and newer vehicles so those are not drags

anticipated expenses down south (don’t exactly know where since OP didn’t even mention state) could be mid-30’s without including insurance {or higher if needing flood insurance or high amounts for emergency fund to cover tornadoes etc.} but OP really needs a better handle on expenses especially health insurance and copays/deductibles
Last edited by Nestegg_User on Thu Jan 25, 2018 8:59 pm, edited 1 time in total.

OldSport
Posts: 309
Joined: Tue Jul 25, 2017 7:01 pm

Re: Can I retire?

Post by OldSport » Thu Jan 25, 2018 8:55 pm

fly66guy wrote:
Thu Jan 25, 2018 7:54 pm
52 YO, single, no kids. Tech professional, Pharma industry, current salary 125K/year.
Very low cost southern metro area. If relocate will be to same or lower cost area.
Home owned outright, no debt of any kind, 1 x 4 year old car
Would like to do light handyman, gofer type work going forward. Dog walk, tutor, paint a room, etc...
Biggest fear = health care costs. No option for retiree health insurance.

Retirement Funds - Vanguard, index funds
RothIRA: 120,000 = 60/40 500Index/Total Bond
RolloverIRA: 220,000 = same mix
401K: 475,000 = 60/40 = same mix

Non-retirement - Vanguard, Index funds
75,000 500Index
60,000 Midcap Index
50,000 Smallcap index

Non-retirement, cash
75,000 MM @ 1.0%
150,000 CDs @ 3.0%
150,000 CDs @ 1.4%

Defined pension from previous employer will bring in about 400/moth starting age 65.
You could retire, but things would be much tighter than they are now, and it sounds like you have a great professional job.

If I were you I'd plan to work 2-3 more years and reassess the situation. You should be in much better shape then to enjoy retirement.

I'd also consider moving your Retirement/IRA funds to Vanguard LifeStrategy Moderate Growth if its available. Same Asset Allocation with more diversification and automatic rebalancing in one fund.

TravelGeek
Posts: 2368
Joined: Sat Oct 25, 2014 3:23 pm

Re: Can I retire?

Post by TravelGeek » Thu Jan 25, 2018 8:56 pm

Nearing_Destination wrote:
Thu Jan 25, 2018 8:52 pm
travelgeek

4% might be too aggressive for the early 50’s (35-40 year expected retirement) hence why I used 3.5% to get the 49k
Right, I agree with you. That's why I also threw out the 3% number. (I personally will use 3%-ish to eval viability with a similar ER age goal as the OP).

I was actually not making any recommendations at all, because I don't think we have sufficient data. My post was just meant to provide a perhaps more easily digestible summary for those with more expertise to make suggestions.

OldSport
Posts: 309
Joined: Tue Jul 25, 2017 7:01 pm

Re: Can I retire?

Post by OldSport » Thu Jan 25, 2018 8:58 pm

Nearing_Destination wrote:
Thu Jan 25, 2018 8:52 pm
travelgeek

4% might be too aggressive for the early 50’s (35-40 year expected retirement) hence why I used 3.5% to get the 49k
4% is maximum, but 3.5% is better to use to account for sequence of return events. 3.5% should be sufficient for most cases. The amount has to include health care expenses though.

anonsdca
Posts: 186
Joined: Mon Jun 01, 2015 11:47 pm

Re: Can I retire?

Post by anonsdca » Thu Jan 25, 2018 9:07 pm

fly66guy wrote:
Thu Jan 25, 2018 7:54 pm
52 YO, single, no kids. Tech professional, Pharma industry, current salary 125K/year.
Very low cost southern metro area. If relocate will be to same or lower cost area.
Home owned outright, no debt of any kind, 1 x 4 year old car
Would like to do light handyman, gofer type work going forward. Dog walk, tutor, paint a room, etc...
Biggest fear = health care costs. No option for retiree health insurance.

Retirement Funds - Vanguard, index funds
RothIRA: 120,000 = 60/40 500Index/Total Bond
RolloverIRA: 220,000 = same mix
401K: 475,000 = 60/40 = same mix

Non-retirement - Vanguard, Index funds
75,000 500Index
60,000 Midcap Index
50,000 Smallcap index

Non-retirement, cash
75,000 MM @ 1.0%
150,000 CDs @ 3.0%
150,000 CDs @ 1.4%

Defined pension from previous employer will bring in about 400/moth starting age 65.
FlyGuy,

On a plane reading, but how do you retire in the early 50's with most of your money in retirement accounts?? Maybe I am missing something because no one has mentioned that.

However, you're single, low 50's no kids--if you have any adventurous bone in your body, go abroad for a while. Put your $1.4M (again, not sure how) in a 3% yielding account and generate $42K a year. Can live very well being single on $24K. You would not have to withdraw anything. If you don't like it, well, OK, you have lost nothing and not drained any of your funds--and in fact have a little more.

2Birds1Stone
Posts: 450
Joined: Wed Nov 19, 2014 10:33 pm
Location: New York

Re: Can I retire?

Post by 2Birds1Stone » Thu Jan 25, 2018 9:16 pm

anonsdca wrote:
Thu Jan 25, 2018 9:07 pm
FlyGuy,

On a plane reading, but how do you retire in the early 50's with most of your money in retirement accounts?? Maybe I am missing something because no one has mentioned that.
He's got $375k in CD's and MM accounts.

$185 in taxable brokerage account.

Then he has Roth principal which he could also tap.

And all he has to do is bridge the next 8(?) years before having access to the 401k.....and probably a very nice SS check.

I'm wondering why you would be concerned at all?

2Birds1Stone
Posts: 450
Joined: Wed Nov 19, 2014 10:33 pm
Location: New York

Re: Can I retire?

Post by 2Birds1Stone » Thu Jan 25, 2018 9:21 pm

OP, yes you can retire.

If you are even somewhat flexible on your withdrawal rate, ie cutting to maybe 2.5-3% during a really bad market downturn, and limiting upside spending to maybe 4.5-5% of initial value. Once you factor in SS and the pension you have pretty much 0.000001% chance of failure.

Forget about what your "fun" work will bring in. If you can reduce your drawdown by .5-1% through side work and stuff you enjoy over the first even 5-10 years of retirement, you will die much richer than you are now.

anonsdca
Posts: 186
Joined: Mon Jun 01, 2015 11:47 pm

Re: Can I retire?

Post by anonsdca » Thu Jan 25, 2018 9:23 pm

2Birds1Stone wrote:
Thu Jan 25, 2018 9:16 pm
anonsdca wrote:
Thu Jan 25, 2018 9:07 pm
FlyGuy,

On a plane reading, but how do you retire in the early 50's with most of your money in retirement accounts?? Maybe I am missing something because no one has mentioned that.
He's got $375k in CD's and MM accounts.

$185 in taxable brokerage account.

Then he has Roth principal which he could also tap.

And all he has to do is bridge the next 8(?) years before having access to the 401k.....and probably a very nice SS check.

I'm wondering why you would be concerned at all?
Well, I am not concerned at all 2Birds.

However, I am interested in early retirement, so I am interested in how he's going to do this in the USA. It might be something I can learn from. As I read everything, I couldn't see it happening, so that is why I asked about accessing the retirement funds prior to 59.5.

It doesn't seem like a lot of money to me at age 52, but I am in the same position that I will need to "bridge the gap" to SS.

Bacchus01
Posts: 1935
Joined: Mon Dec 24, 2012 9:35 pm

Re: Can I retire?

Post by Bacchus01 » Thu Jan 25, 2018 9:33 pm

Can you? Yep

Should you? That depends more on what you plan to spend than how much you’ve saved.

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Watty
Posts: 14381
Joined: Wed Oct 10, 2007 3:55 pm

Re: Can I retire?

Post by Watty » Thu Jan 25, 2018 10:09 pm

fly66guy wrote:
Thu Jan 25, 2018 7:54 pm
Would like to do light handyman, gofer type work going forward. Dog walk, tutor, paint a room, etc...
Biggest fear = health care costs. No option for retiree health insurance.
FYI, I know two people that were laid off in their 50's that got jobs as school bus drivers as a bridge job into retirement. It does not pay a lot but it comes with benefits. They also got summers and school holidays off. At least in my area they are always looking for school bus drives since people that need full time work want more hours than a school bus driver job gets.

With making $125K a year now woking another six months could eliminate several years of low paid work.
Nearing_Destination wrote:
Thu Jan 25, 2018 8:52 pm
4% might be too aggressive for the early 50’s (35-40 year expected retirement) hence why I used 3.5% to get the 49k
TravelGeek wrote:
Thu Jan 25, 2018 8:44 pm
Total: $1,375,000 (3% would be $41,250, 4% would be $55,000)
This is especially true for you since you would have modest budget without a lot of room to make big reductions if you needed to.

Nyc10036
Posts: 355
Joined: Wed Oct 05, 2016 6:29 pm

Re: Can I retire?

Post by Nyc10036 » Thu Jan 25, 2018 10:16 pm

There's a recent thread in the early-retirement.org forums about a guy who died the day before his retirement at 62.
http://www.early-retirement.org/forums/ ... 90138.html

I like the phrase that "Nightcap" wrote --- we are quickly running out of life.

I stopped working full time at age 50 for a breather.
Because I didn't want to relocate and I didn't want to have hour long commutes, so I haven't been able to find another full time job since.
Ageism and cheaper labor of freshouts catches up when one is 50+.
Working contract/temp jobs for the past 4 years.

fly66guy
Posts: 2
Joined: Thu Jan 25, 2018 7:24 pm

Re: Can I retire?

Post by fly66guy » Thu Jan 25, 2018 10:24 pm

Thanks all! Seems like on average the opinion is close, but not quite yet. Pretty much my feeling, confirmation feels pretty good. My initial goal was to work until 55 to access the 401K without penalty. But having seen a few friends pass away before 55, you just get to thinking, I bet most everyone does.

State is Tennessee, so no hurricane threats. Maybe even the lowest cost place in the US. My utility bills averaged 120/month for example. Prop taxes were total 1900.


I feel comfortable with a spend of average 30K/year non inflation adjusted, excluding health & health ins - those I just can't get a handle on.

I realize I've got more analysis and research to do, but do appreciate the feedback.

furnace
Posts: 284
Joined: Tue Oct 20, 2015 3:38 pm

Re: Can I retire?

Post by furnace » Thu Jan 25, 2018 10:30 pm

Get married, have a baby. You'll quickly lose the urge to retire early (or retire at all.)

Next year, 2019, the Obamacare individual penalty is dropped, so you won't have to carry insurance. That's $15-$20k saved each year. Pay cash or self treat for minor stuff. For serious illnesses, do medical tourism. If you should die from a medical error, at least you're not overcharged.

The biggest hurdle to overcome is FEAR. You can make it work but get over your fear and open your mind to the possibilities out there.

TravelGeek
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Re: Can I retire?

Post by TravelGeek » Thu Jan 25, 2018 10:42 pm

furnace wrote:
Thu Jan 25, 2018 10:30 pm
Pay cash or self treat for minor stuff. For serious illnesses, do medical tourism. If you should die from a medical error, at least you're not overcharged.
So reverse medical evac insurance that takes you to a cheap foreign medical destination of your choice if you keel over with a heart attack somewhere in the US?

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Nestegg_User
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Re: Can I retire?

Post by Nestegg_User » Thu Jan 25, 2018 11:16 pm

fly66guy wrote:
Thu Jan 25, 2018 10:24 pm
Thanks all! Seems like on average the opinion is close, but not quite yet. Pretty much my feeling, confirmation feels pretty good. My initial goal was to work until 55 to access the 401K without penalty. But having seen a few friends pass away before 55, you just get to thinking, I bet most everyone does.

State is Tennessee, so no hurricane threats. Maybe even the lowest cost place in the US. My utility bills averaged 120/month for example. Prop taxes were total 1900.


I feel comfortable with a spend of average 30K/year non inflation adjusted, excluding health & health ins - those I just can't get a handle on.

I realize I've got more analysis and research to do, but do appreciate the feedback.
FlyGuy

That's why I figured mid-30's excluding health insurance upthread... figured I was close

It may then depend on availability of providers... and where in TN you are as Nashville, Knoxville, and maybe Chatanooga will be different than Memphis (which I've heard doesn't have as many providers, might have changed)

I do understand that TN is somewhat the sweet spot in terms of moderate climate (lived there ages ago), overall cost of living, and somewhat beneficial taxes. I might be more inclined toward either Clarksville (close enough to Land between the Lakes and also Nashville if I needed specialist medical treatment) or Murfreesboro (lower cost but also close to MTSU for activities); either might be big enough for side gigs to supplement portfolio.

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willthrill81
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Re: Can I retire?

Post by willthrill81 » Fri Jan 26, 2018 2:08 am

Regarding health insurance, I'd suggest that you look into some of the health sharing plans. If you meet their requirements, the monthly outlay can be FAR more reasonable than traditional health insurance. While I don't currently need it, I recently found a large, reputable one that would have a $10k annual 'deductible' for a monthly 'premium' of $200 for our healthy family of three.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

BeneIRA
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Re: Can I retire?

Post by BeneIRA » Fri Jan 26, 2018 8:53 am

I agree that it is close, but I would lean towards working until at least 54, ideally 55, the latter to access the 401k. That will mean a couple more years of health insurance, which I agree is probably your biggest concern at least until age 65, and more money towards retirement. If I am you, since you are focusing on retiring as fast as you can, I would try to up that Roth amount. I am going completely out on a limb here, but maybe start converting some of that Pre-tax retirement money into Roth, just make sure you stay in the same tax bracket. It would give you more diversification going forward since most of your retirement money is pre-tax. At least right now, you can easily cover the taxes and it will help later on because you can choose to withdraw from your Roth or pre-tax money to stay in a low tax bracket. I could also be completely off my rocker.

MoonOrb
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Re: Can I retire?

Post by MoonOrb » Fri Jan 26, 2018 9:22 am

As an aside, might you not want to move your bond allocation to be totally within your 401k or IRA and leave your Roth free to be 100% equity?

If you have the ability or willingness to go back to work if you find you need additional money or you need healthcare benefits, then this is an easy, yes, you can retire right now answer. Your pension + SS will cover most or all of your non health care related expenses once you get there, and what you’ve already amassed should easily let you bridge the gap, especially if you are capable of returning to the workforce to do some kind of work along the way.

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snodog
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Re: Can I retire?

Post by snodog » Fri Jan 26, 2018 11:22 am

You are good to go in my book. Using $25,000/yr for SS at age 65, Firecalc gives you 100% success rate spending $58,000/yr for 45 years.

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