Can I retire?

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Topic Author
ltermt
Posts: 6
Joined: Sat Mar 30, 2019 6:50 pm

Can I retire?

Post by ltermt » Wed Apr 29, 2020 5:22 am

Can I retire with current financials?

Age 48, Single
1.2M in CDs.
557K in 401K.
No pension.
No debt.
No mortgage.
Annual expenses 12K.

sd323232
Posts: 505
Joined: Thu Jun 21, 2018 4:45 pm

Re: Can I retire?

Post by sd323232 » Wed Apr 29, 2020 5:36 am

yes, you can.

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Watty
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Re: Can I retire?

Post by Watty » Wed Apr 29, 2020 5:51 am

ltermt wrote:
Wed Apr 29, 2020 5:22 am
Annual expenses 12K.
Even with a paid off house, if you have one, your expenses are not anywhere near realistic even in a very low cost of living area if you are in the US. If you can't qualify for a healthcare subsidy, or it becomes unavailable in the future then you could spend that much on health insurance alone especially since it will go up when you get in your 50s and 60s.

I would suggest putting $12K into a checking account then use that for all your spending to see how long it lasts when you factor in things like healthcare and taxes that might be paid from your paycheck.

You might still be able to retire though if you can keep your spending below $30K or $40K a year but that would still be a modest lifestyle.

student
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Joined: Fri Apr 03, 2015 6:58 am

Re: Can I retire?

Post by student » Wed Apr 29, 2020 6:41 am

Watty wrote:
Wed Apr 29, 2020 5:51 am
ltermt wrote:
Wed Apr 29, 2020 5:22 am
Annual expenses 12K.
Even with a paid off house, if you have one, your expenses are not anywhere near realistic even in a very low cost of living area if you are in the US. If you can't qualify for a healthcare subsidy, or it becomes unavailable in the future then you could spend that much on health insurance alone especially since it will go up when you get in your 50s and 60s.

I would suggest putting $12K into a checking account then use that for all your spending to see how long it lasts when you factor in things like healthcare and taxes that might be paid from your paycheck.

You might still be able to retire though if you can keep your spending below $30K or $40K a year but that would still be a modest lifestyle.
+1.

Topic Author
ltermt
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Joined: Sat Mar 30, 2019 6:50 pm

Re: Can I retire?

Post by ltermt » Wed Apr 29, 2020 7:26 am

Current strategy had been: Put 1k into checking account in the beginning of each month. After Christmas, left with $500-700 balance.
If I don't touch the principle till 55(another 7 years), and my expenses double due to health and creature comforts, will this be sustainable ?

I have worked for 21 years and paid into Social Security. So should expect to get something to supplement old age.

Call_Me_Op
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Location: Milky Way

Re: Can I retire?

Post by Call_Me_Op » Wed Apr 29, 2020 7:35 am

ltermt wrote:
Wed Apr 29, 2020 5:22 am
Can I retire with current financials?

Age 48, Single
1.2M in CDs.
557K in 401K.
No pension.
No debt.
No mortgage.
Annual expenses 12K.
Is this a trick question? A 0.68% withdrawal rate without even considering social security? How do you keep your expenses so low? Or maybe I should ask why you keep them so low. You can increase them substantially with no worries.

As a rough rule of thumb, retiring at age 48 requires a portfolio of about 42X. You have over 3X that.
Best regards, -Op | | "In the middle of difficulty lies opportunity." Einstein

OnTrack2020
Posts: 590
Joined: Mon Mar 20, 2017 10:24 am

Re: Can I retire?

Post by OnTrack2020 » Wed Apr 29, 2020 7:54 am

Watty wrote:
Wed Apr 29, 2020 5:51 am
ltermt wrote:
Wed Apr 29, 2020 5:22 am
Annual expenses 12K.
Even with a paid off house, if you have one, your expenses are not anywhere near realistic even in a very low cost of living area if you are in the US. If you can't qualify for a healthcare subsidy, or it becomes unavailable in the future then you could spend that much on health insurance alone especially since it will go up when you get in your 50s and 60s.

I would suggest putting $12K into a checking account then use that for all your spending to see how long it lasts when you factor in things like healthcare and taxes that might be paid from your paycheck.

You might still be able to retire though if you can keep your spending below $30K or $40K a year but that would still be a modest lifestyle.

There are people in the U.S. who are just extremely frugal. My father was one of them. His annual expenses were much less than the OPs. This year, our expenses for our family will run us, on average, a little over $11,000 per person. Note*: Am expecting this number to go up next year due to health insurance. The OP may be able to get a policy which costs him another $800-$1,000 per month. Okay, now he'll be at $24,000 per year in expenses. But let's not say the OPs expenses are not realistic.

Beehave
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Joined: Mon Jun 19, 2017 12:46 pm

Re: Can I retire?

Post by Beehave » Wed Apr 29, 2020 8:01 am

Retiring removes a major source of social interaction. Before retiring make sure you have some plan for feeling engaged - - hobby, volunteering, part-time work, etc.

Best wishes.

toocold
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Joined: Sun Jul 23, 2017 9:17 am

Re: Can I retire?

Post by toocold » Wed Apr 29, 2020 8:12 am

Yes, if your expenses remain 12k.

Topic Author
ltermt
Posts: 6
Joined: Sat Mar 30, 2019 6:50 pm

Re: Can I retire?

Post by ltermt » Wed Apr 29, 2020 8:37 am

Live in the suburbs in the Midwest. Never had much desire in material possession. Have all the material possessions and creature comforts.
Currently care giver for family members. Keeping them engaged and busy during the day, doing chores keeps me occupied.

Get a few hours a day to keep current on my skills in Software Development.

MathIsMyWayr
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Location: CA

Re: Can I retire?

Post by MathIsMyWayr » Wed Apr 29, 2020 9:04 am

ltermt wrote:
Wed Apr 29, 2020 5:22 am
Can I retire with current financials?

Age 48, Single
1.2M in CDs.
557K in 401K.
No pension.
No debt.
No mortgage.
Annual expenses 12K.
(1200+557)/12=146.4 years - life is too short.

hicabob
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Location: cruz

Re: Can I retire?

Post by hicabob » Wed Apr 29, 2020 9:06 am

Perhaps include $10k/yr or so for medical insurance/expenses unless you plan do do without?

cableguy
Posts: 153
Joined: Thu May 09, 2019 3:34 pm

Re: Can I retire?

Post by cableguy » Wed Apr 29, 2020 9:10 am

Not sure. But you can take off 1-2 years and see if you like it and if not, go get a job again. You are young...

Pullupking214
Posts: 17
Joined: Mon Mar 16, 2020 12:24 pm

Re: Can I retire?

Post by Pullupking214 » Wed Apr 29, 2020 9:12 am

You can definitely retire. They say a 3% or 4% withdrawl rate is time tested to last past death in 95% of cases. That draw down rate for you would be close to $36k - $45k a year. You are pulling well below that figure. Seems to be perfect okay.

Assuming healthcare would be taken care of by employers, Obamacare, or Medicare. Answer is a definite yes. Cheers!

runner3081
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Joined: Mon Aug 22, 2016 3:22 pm

Re: Can I retire?

Post by runner3081 » Wed Apr 29, 2020 9:18 am

hicabob wrote:
Wed Apr 29, 2020 9:06 am
Perhaps include $10k/yr or so for medical insurance/expenses unless you plan do do without?
But, if he only needs 12K per year to live, he won't be drawing enough to pay much, if anything for ACA plans.

runner3081
Posts: 3189
Joined: Mon Aug 22, 2016 3:22 pm

Re: Can I retire?

Post by runner3081 » Wed Apr 29, 2020 9:21 am

Watty wrote:
Wed Apr 29, 2020 5:51 am
ltermt wrote:
Wed Apr 29, 2020 5:22 am
Annual expenses 12K.
Even with a paid off house, if you have one, your expenses are not anywhere near realistic even in a very low cost of living area if you are in the US. If you can't qualify for a healthcare subsidy, or it becomes unavailable in the future then you could spend that much on health insurance alone especially since it will go up when you get in your 50s and 60s.
Not necessarily. Some people don't need a lot.

If insurance, prop taxes and food consumption costs are low, there isn't much left if you don't buy "things".

Granted, like you said, healthcare could throw him a curve-ball.

Family of 3 here and we are at about 25K per year in the PHX area. So I don't see his number as fantasy at all.

as9
Posts: 161
Joined: Mon Jan 27, 2020 9:26 am

Re: Can I retire?

Post by as9 » Wed Apr 29, 2020 9:22 am

I think the answer is almost certainly yes even if you live to be very old and the market doesn't give you much. This is particularly true if you are a software developer who will spend some time staying current as you'd have a better chance of re-entering the workforce if necessary. Regardless you could probably take on freelance gigs if necessary.

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Watty
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Re: Can I retire?

Post by Watty » Wed Apr 29, 2020 9:48 am

ltermt wrote:
Wed Apr 29, 2020 7:26 am
Age 48......


If I don't touch the principle till 55(another 7 years), and my expenses double due to health and creature comforts, will this be sustainable ?
Between the CDs and your 401k you have $1.7 million dollars.

For a back of the envelope reality check if your expenses are really $40K a year then $1.7 million/$40 = 42.5 years so that would last until you last you until you are 90.5 years old if you put the money under a mattress and just pulled out $40K each year. If your expenses are $30K then it would last almost 57 years.

That is very rough and does not include Social Security, dividends, or interest so you should do just fine but there are a lot of details to figure out.

One problem is that you could be hurt by inflation so leaving that much in CDs would be risky so you would need to figure out some better way to invest your money overall.

You also should make sure that the CDs at any one bank do not exceed the $250K FDIC insurance limits so that you will not lose money if the bank run into problems. With all the weird stuff going on and the talk of a depression that is a risk I would not ignore even though bank failures have been rare.

You can check this web site to get a suggested claiming Social Security claiming strategy which may vary if you were ever widowed or divorced after being married for 10 years. You can get your PIA amount off the Social Security web site but be sure to specify that you would stop working now, it will default to assume that you will work until you are 65.

https://opensocialsecurity.com/

Most likely it will suggest that you delay starting Social Security until you are 70.

Having over a million dollars in CDs and no other investments in the taxable account is a problem because it will not keep up with inflation so you will need to decide what to do with it for the long term. If you are conservative and being cautious by having so much money in CDs then one option would be to buy a ladder of individual TIPS bonds where some matures each year until start Social Security. Since you are 48 you have 22 years until you turn 70 when you would likely start Social Security. You could build a ladder of TIPS where you have $20K mature in each year in 2021, 2022, 2023, and so on until you are 70. That way each year even with inflation you would have the inflation adjusted equivalent of $20K a year to spend, before taxes. You would also have interest and dividends from your other investments each year.

Some people would also find that having a TIPS ladder like that would let them sleep very well at night and reading between the lines it sounds like you are under a lot of stress with taking care of your family.

Normally owning TIPS in a taxable account is not ideal since you are taxed each year on the inflation adjustment but you will likely be a low tax bracket so that may not be much of an issue.

22 years x $20K= $440K that it would cost you to build a TIPS ladder. You would then need to figure out how to spend the rest of the money.

You can also post more of your information using this suggested format as a guideline, but it does not need to be exact, to get better suggestions on how to invest the money if you want to.

viewtopic.php?f=1&t=6212

There are lots of details about figuring out your health insurance so that would be good to also plan that out.

When I retired I retired at the end of June so that I could use COBRA to continue my employer health insurance for 18 months which would take me through the end of that year and all of the next year so I would not need to switch to an affordable healthcare policy until the January 1st the year after that. That avoids having to switch plans in the middle of the year and start the yearly deductible all over.

At some(but not all) employers your health insurance will go through the end of the month when you leave the job so if you retired on June 1st you would not need to start COBRA until July so it could last all the way through next year.

flyingaway
Posts: 2713
Joined: Fri Jan 17, 2014 10:19 am

Re: Can I retire?

Post by flyingaway » Wed Apr 29, 2020 10:15 am

ltermt wrote:
Wed Apr 29, 2020 8:37 am
Live in the suburbs in the Midwest. Never had much desire in material possession. Have all the material possessions and creature comforts.
Currently care giver for family members. Keeping them engaged and busy during the day, doing chores keeps me occupied.

Get a few hours a day to keep current on my skills in Software Development.
Maybe you live with the family members you are caring for which keeps your expenses low.
I think you can retire formally from your software development job. Maybe you should put more of your portfolio in stock funds, for example, 50/50 stock/DC(bond).

If my children quitted their jobs and come back to care for us, their annual expenses could be zero in similar situations.

Topic Author
ltermt
Posts: 6
Joined: Sat Mar 30, 2019 6:50 pm

Re: Can I retire?

Post by ltermt » Wed Apr 29, 2020 12:00 pm

Thank you all for the feedback.
It is a confluence of many things that have got me thinking of retirement and spending time at home without the stress of working. Being home has also significantly helped the outlook and disposition of the family members I care for. Will consider a completely remote work from home position in future, if it gets too tedious.

iamblessed
Posts: 577
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Re: Can I retire?

Post by iamblessed » Wed Apr 29, 2020 1:00 pm

You can retire easy. The thing I would worry about is your estate plan. I think you will die with a lot of money. Do you have worthy people to give money to or do you need to spend more? Not an easy question for everybody.

Mr.BB
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Joined: Sun May 08, 2016 10:10 am

Re: Can I retire?

Post by Mr.BB » Wed Apr 29, 2020 1:04 pm

Why would you want to live on basically 12k a year the rest of your life? That is basically poverty level income.
And that is assuming nothing is going to change (your medical/health situation, etc).
"We are what we repeatedly do. Excellence, then, is not an act, but a habit."

as9
Posts: 161
Joined: Mon Jan 27, 2020 9:26 am

Re: Can I retire?

Post by as9 » Wed Apr 29, 2020 1:35 pm

ltermt wrote:
Wed Apr 29, 2020 12:00 pm
Thank you all for the feedback.
It is a confluence of many things that have got me thinking of retirement and spending time at home without the stress of working. Being home has also significantly helped the outlook and disposition of the family members I care for. Will consider a completely remote work from home position in future, if it gets too tedious.
If continuing to work but being able to do so from home would give many of the same benefits then I would definitely explore finding a job that allows you to do that (there are many remote developer positions). Even if you had to take a paycut to do so then you'd be in a really strong position and could spend FAR more money than you currently are.

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