Near number but not at retirement age

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am
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Near number but not at retirement age

Post by am »

Mid 40s with retirement portfolio approaching low end of my goal (about 74% there) which would provide low 6 figure yearly income at retirement with sub 4% withdrawal rate. More than half the funds are in accounts which aren’t available until 59. I have a pension at 62 which would provide health coverage for life and not much more. SS as well. My partner has income from internet business which covers our expenses but may not last. My full time job is stressful and taking a toll. Would love to cut back but have reservations.

My question is: have any bogleheads essentially stopped saving once near their number at an age before planned retirement? Perhaps take an easier job or drastically cut back to just cover expenses and let their portfolio grow until retirement age? How did it work out for you?
Last edited by am on Sat Sep 12, 2020 10:43 am, edited 1 time in total.
sailaway
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Re: Near number but not at retirement age

Post by sailaway »

This is known as Coast FIRE and somehow it seems to take the most guts of all. I think it is because we are programmed to complete something before we walk away.

If your wife's work currently covers expenses, then any inome you bring could still be added to savings, just at a slower rate.
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Watty
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Re: Near number but not at retirement age

Post by Watty »

am wrote: Sat Sep 12, 2020 9:23 am My question is: have any bogleheads essentially stopped investing once near their number at an age before planned retirement?
My situation was much different but about five years before I could really afford to retire I ended up reducing my 401k contributions down to be just enough to get an employer match. That allowed me to spend more on things like travel while I was still working. I retired when I was 58

At that point if I had contributed $10K more a year to the 401k that would not have really made much different in when I would have been able to retire. I was not a millionaire or anything by there would also be weeks and maybe even days when my 401k balance would vary by more than $10K just because the stock market was up or down. Being able to hit my final "number" was a lot more dependent on my investment returns than my contributions.
am wrote: Sat Sep 12, 2020 9:23 am More than half the funds are in accounts which aren’t available until 59.
There are likely a even more ways than these but there are ways to get at the money before you are 59.5 without paying a penalty if you jump through the right hoops.

With a Roth IRA you can withdraw the contributions, but not earnings, without a penalty.

With a 401k you are usually able to access the money without any penalty if you turn 55 in the year when you stop working for that company.

You would need to read up on the details but as I understand it you can also do a Roth conversion then wait five years then withdraw the money from a Roth.

You can also set up an early withdrawal plan without a penalty.
https://www.bogleheads.org/wiki/Substan ... c_payments
Old Sage(brush)
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Re: Near number but not at retirement age

Post by Old Sage(brush) »

Yes, I did exactly that. And I was not really as near number as you are, although I had a nice severance package at the time of the transition. I left a corporate job when I was about 50 that I hated due to toxic culture and ended up landing in a much lower paid job in academia. Compensation cut was about 1/4. New job roughly covered expenses with still some contribution to 401k, but greatly reduced contributions to retirement. Essentially allowed my portfolio to grow with the market for about 10 years while reducing the need (shortened time in true retirement). My job in academia had prestige because of brand name of institution and that somewhat eased my ego (unfortunately, I think ego and perceptions about what others may think factors into this). So, I consider myself very lucky and for me, this worked great, but everyone is different. I traded money for lower stress, more satisfying work which had a public benefit, more time and being happier. I am thankful I had the opportunity and that I was able to make the change. It was quite stressful to actually go through it. Good luck with your decision.
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willthrill81
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Re: Near number but not at retirement age

Post by willthrill81 »

am wrote: Sat Sep 12, 2020 9:23 am Mid 40s with retirement portfolio approaching low end of my goal (about 74% there) which would provide low 6 figure yearly income at retirement with sub 4% withdrawal rate. More than half the funds are in accounts which aren’t available until 59. I have a pension at 62 which would provide health coverage for life and not much more. SS as well. My partner has income from internet business which covers our expenses but may not last. My full time job is stressful and taking a toll. Would love to cut back but have reservations.

My question is: have any bogleheads essentially stopped investing once near their number at an age before planned retirement? Perhaps take an easier job or drastically cut back to just cover expenses and let their portfolio grow until retirement age? How did it work out for you?
If you've got another 15 years until age 60, you only need about 2% real annualized returns to reach your goal. As such, as long as you have about 50% exposure to stocks, I'd say that you could completely stop contributing if you wanted to. However, there are ways to access funds in retirement accounts prior to age 59.5 if you wanted to pursue early retirement.

It's entirely plausible that you could move on to a lower paid, less stressful job.
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TheTimeLord
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Re: Near number but not at retirement age

Post by TheTimeLord »

am wrote: Sat Sep 12, 2020 9:23 am Mid 40s with retirement portfolio approaching low end of my goal (about 74% there) which would provide low 6 figure yearly income at retirement with sub 4% withdrawal rate. More than half the funds are in accounts which aren’t available until 59. I have a pension at 62 which would provide health coverage for life and not much more. SS as well. My partner has income from internet business which covers our expenses but may not last. My full time job is stressful and taking a toll. Would love to cut back but have reservations.

My question is: have any bogleheads essentially stopped investing once near their number at an age before planned retirement? Perhaps take an easier job or drastically cut back to just cover expenses and let their portfolio grow until retirement age? How did it work out for you?
Personally I would not be describing 74% of the low end of my goal as "near". Sounds like you may be feeling the need for a lifestyle change, which is fine, but be careful in painting a too rosy picture of your financial situation or expected future returns in an effort to justify your desire for a change. That said remember this is coming for a guy who believed in running through the finishing line so we may have very different approaches.
Last edited by TheTimeLord on Sat Sep 12, 2020 10:03 am, edited 1 time in total.
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willthrill81
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Re: Near number but not at retirement age

Post by willthrill81 »

TheTimeLord wrote: Sat Sep 12, 2020 10:01 am Personally I would not be describing 74% of the low end of my goal as "near". Sounds like you may be feeling the need for a lifestyle change, which is fine, but be careful in painting a too rosy picture of your financial situation or expected future returns in an effort to justify your desire for a change.
As I noted above, the OP only needs 2% real growth for 15 years to reach 100%. Unless the majority of their AA is in bonds, that sounds very plausible to me.
“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
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am
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Re: Near number but not at retirement age

Post by am »

TheTimeLord wrote: Sat Sep 12, 2020 10:01 am
am wrote: Sat Sep 12, 2020 9:23 am Mid 40s with retirement portfolio approaching low end of my goal (about 74% there) which would provide low 6 figure yearly income at retirement with sub 4% withdrawal rate. More than half the funds are in accounts which aren’t available until 59. I have a pension at 62 which would provide health coverage for life and not much more. SS as well. My partner has income from internet business which covers our expenses but may not last. My full time job is stressful and taking a toll. Would love to cut back but have reservations.

My question is: have any bogleheads essentially stopped investing once near their number at an age before planned retirement? Perhaps take an easier job or drastically cut back to just cover expenses and let their portfolio grow until retirement age? How did it work out for you?
Personally I would not be describing 74% of the low end of my goal as "near". Sounds like you may be feeling the need for a lifestyle change, which is fine, but be careful in painting a too rosy picture of your financial situation or expected future returns in an effort to justify your desire for a change.
I’m hoping the portfolio will get to goal and beyond with a modest growth rate since I have time before I’d want to call it quits for good. My portfolio is about 75% stocks/25% bonds and cash. If my income went down by 1/2 due to a career change or cutback, I’d probably feel more comfortable with less stock.
Last edited by am on Sat Sep 12, 2020 10:09 am, edited 1 time in total.
KlangFool
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Re: Near number but not at retirement age

Post by KlangFool »

am wrote: Sat Sep 12, 2020 9:23 am Mid 40s with retirement portfolio approaching low end of my goal (about 74% there) which would provide low 6 figure yearly income at retirement with sub 4% withdrawal rate. More than half the funds are in accounts which aren’t available until 59. I have a pension at 62 which would provide health coverage for life and not much more. SS as well. My partner has income from internet business which covers our expenses but may not last. My full time job is stressful and taking a toll. Would love to cut back but have reservations.

My question is: have any bogleheads essentially stopped investing once near their number at an age before planned retirement? Perhaps take an easier job or drastically cut back to just cover expenses and let their portfolio grow until retirement age? How did it work out for you?
am,

This statement is not true. Check out the following URL.


https://www.madfientist.com/how-to-acce ... nds-early/

<<My partner has income from internet business which covers our expenses but may not last. >>


Do your numbers covers your partner's retirement too? Do you plan to support your partner?

<<My question is: have any bogleheads essentially stopped investing once near their number at an age before planned retirement?>>

No. But, I choose a lowered paying and less stressful job when my portfolio was bigger.


KlangFool
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TheTimeLord
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Re: Near number but not at retirement age

Post by TheTimeLord »

willthrill81 wrote: Sat Sep 12, 2020 10:03 am
TheTimeLord wrote: Sat Sep 12, 2020 10:01 am Personally I would not be describing 74% of the low end of my goal as "near". Sounds like you may be feeling the need for a lifestyle change, which is fine, but be careful in painting a too rosy picture of your financial situation or expected future returns in an effort to justify your desire for a change.
As I noted above, the OP only needs 2% real growth for 15 years to reach 100%. Unless the majority of their AA is in bonds, that sounds very plausible to me.
100% of low end as I understand the situation. I would be very uncomfortable doing that, I would personally be far more comfortable in trying to actually accelerate and finish early than coasting. That said I would never put life on hold waiting for retirement either. It is all so personal and I don't know the OP well enough to advise their true personal situation so I can only respond from my personal experience.
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bogivan
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Re: Near number but not at retirement age

Post by bogivan »

am wrote: Sat Sep 12, 2020 9:23 am My full time job is stressful and taking a toll. Would love to cut back but have reservations.
Can you cut the stress back at the current job or is it not the kind of profession where that is possible? When I approached my number, I began creating more firm boundaries around what kind of stress I was willing to put up with. This was very different from earlier in my career where I would stay late, work from home, and basically say "yes" to anything. I started saying "no" more frequently and much more openly discussed the aspects of the job that I didn't like with my boss in order to change them which reduced the stress. This seems to actually come naturally to a lot of people reaching financial independence: either starting to "check out" or otherwise de-prioritizing the job in their life when your brain starts realizing that your job is financially an option and no longer a necessity.

Another consideration is whether your profession is something you can jump in and out of: what if you took a 1-5 year sabbatical? Plan a break and see where your portfolio (and your real early retirement expenses!) are after that period. Perhaps you could even come up with a reason to request extended leave from your current job so you have the old position to go back to.
Last edited by bogivan on Sat Sep 12, 2020 10:15 am, edited 1 time in total.
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Brianmcg321
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Re: Near number but not at retirement age

Post by Brianmcg321 »

I’m at that point now. 47 and have hit seven figures. That was my goal by 60. If I don’t contribute another dime will have almost $3mil by 60.

I’ve reduced my retirement savings from 25% to just 6% (to get company match in 401k).

We have decided to upgrade our cars and spend more money on our home renovation.
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Re: Near number but not at retirement age

Post by am »

bogivan wrote: Sat Sep 12, 2020 10:12 am
am wrote: Sat Sep 12, 2020 9:23 am My full time job is stressful and taking a toll. Would love to cut back but have reservations.
Can you cut the stress back at the current job or is it not the kind of profession where that is possible? When I approached my number, I began creating more firm boundaries around what kind of stress I was willing to put up with. This was very different from earlier in my career where I would stay late, work from home, and basically say "yes" to anything. I started saying "no" more frequently and much more openly discussed the aspects of the job that I didn't like with my boss in order to change them which reduced the stress. This seems to actually come natural to a lot of people reaching financial independence: either starting to "check out" or otherwise de-prioritizing the job in their life when your brain starts realizing that your job is financially an option and no longer a necessity.

Another consideration is whether your profession is something you can jump in and out of: what if you took a 1-5 year sabbatical? Plan a break and see where your portfolio (and your real early retirement expenses!) are after that period. Perhaps you could even come up with a reason to request extended leave from your current job so you have the old position to go back to.
Medicine is inherently stressful and makes sabbaticals difficult to do. Corporatized medicine and being an employee makes it difficult to say no too much as you are replaceable like any other worker.
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Re: Near number but not at retirement age

Post by Watty »

am wrote: Sat Sep 12, 2020 9:23 am Mid 40s with retirement portfolio approaching low end of my goal (about 74% there)....
Trying to slice and dice the math is tricky.

The problem is that the goal keeps moving and the magic number would be a lot different to retire, or semi-retire, at 45 than it would be when you are 62 or some other age.
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Re: Near number but not at retirement age

Post by am »

KlangFool wrote: Sat Sep 12, 2020 10:09 am
am wrote: Sat Sep 12, 2020 9:23 am Mid 40s with retirement portfolio approaching low end of my goal (about 74% there) which would provide low 6 figure yearly income at retirement with sub 4% withdrawal rate. More than half the funds are in accounts which aren’t available until 59. I have a pension at 62 which would provide health coverage for life and not much more. SS as well. My partner has income from internet business which covers our expenses but may not last. My full time job is stressful and taking a toll. Would love to cut back but have reservations.

My question is: have any bogleheads essentially stopped investing once near their number at an age before planned retirement? Perhaps take an easier job or drastically cut back to just cover expenses and let their portfolio grow until retirement age? How did it work out for you?
am,

This statement is not true. Check out the following URL.


https://www.madfientist.com/how-to-acce ... nds-early/

<<My partner has income from internet business which covers our expenses but may not last. >>


Do your numbers covers your partner's retirement too? Do you plan to support your partner?

<<My question is: have any bogleheads essentially stopped investing once near their number at an age before planned retirement?>>

No. But, I choose a lowered paying and less stressful job when my portfolio was bigger.


KlangFool
Partner and I share expenses so it’s for both of us.

72t option only allows a maximum of about 28,500 withdrawal right now per million due to such low interest rates. 120% of fed midterm rate is .42% right now.

https://www.bankrate.com/retirement/cal ... alculator/
Last edited by am on Sat Sep 12, 2020 10:19 am, edited 1 time in total.
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TheTimeLord
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Re: Near number but not at retirement age

Post by TheTimeLord »

am wrote: Sat Sep 12, 2020 10:05 am
TheTimeLord wrote: Sat Sep 12, 2020 10:01 am
am wrote: Sat Sep 12, 2020 9:23 am Mid 40s with retirement portfolio approaching low end of my goal (about 74% there) which would provide low 6 figure yearly income at retirement with sub 4% withdrawal rate. More than half the funds are in accounts which aren’t available until 59. I have a pension at 62 which would provide health coverage for life and not much more. SS as well. My partner has income from internet business which covers our expenses but may not last. My full time job is stressful and taking a toll. Would love to cut back but have reservations.

My question is: have any bogleheads essentially stopped investing once near their number at an age before planned retirement? Perhaps take an easier job or drastically cut back to just cover expenses and let their portfolio grow until retirement age? How did it work out for you?
Personally I would not be describing 74% of the low end of my goal as "near". Sounds like you may be feeling the need for a lifestyle change, which is fine, but be careful in painting a too rosy picture of your financial situation or expected future returns in an effort to justify your desire for a change.
I’m hoping the portfolio will get to goal and beyond with a modest growth rate since I have time before I’d want to call it quits for good. My portfolio is about 75% stocks/25% bonds and cash. If my income went down by 1/2 due to a career change or cutback, I’d probably feel more comfortable with less stock.
Again, I think this is more your desire to change your lifestyle and you seem to be being pulled between the value you see in a lifestyle change and your concerns for the retirement lifestyle you have pictured/planned for. Take a step back, think about your priorities and your needs, what do you have to have, what is optional and what are you willing to give up if market returns don't meet expectations. I think if you can do that you will get a clearer picture of what path to take. Try to understand yourself and if you need a financial pad to enjoy life or if you would be comfortable cutting back or delaying things in lean years. I believe knowing yourself is critical step to understanding what you really need financially.
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Re: Near number but not at retirement age

Post by flaccidsteele »

am wrote: Sat Sep 12, 2020 9:23 am Mid 40s with retirement portfolio approaching low end of my goal (about 74% there) which would provide low 6 figure yearly income at retirement with sub 4% withdrawal rate. More than half the funds are in accounts which aren’t available until 59. I have a pension at 62 which would provide health coverage for life and not much more. SS as well. My partner has income from internet business which covers our expenses but may not last. My full time job is stressful and taking a toll. Would love to cut back but have reservations.

My question is: have any bogleheads essentially stopped investing once near their number at an age before planned retirement? Perhaps take an easier job or drastically cut back to just cover expenses and let their portfolio grow until retirement age? How did it work out for you?
Yes

I expected to retire around 55

I retired in my 40s. It worked out well. Personally it was challenging going through withdrawal from the addiction of regular pay

Once withdrawal symptoms go away you get over it because you no longer need to trade your Life for money
The US market always recovers. It’s never different this time. Retired in my 40s. Investing is a simple game of rinse and repeat
KlangFool
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Re: Near number but not at retirement age

Post by KlangFool »

am wrote: Sat Sep 12, 2020 10:18 am
KlangFool wrote: Sat Sep 12, 2020 10:09 am
am wrote: Sat Sep 12, 2020 9:23 am Mid 40s with retirement portfolio approaching low end of my goal (about 74% there) which would provide low 6 figure yearly income at retirement with sub 4% withdrawal rate. More than half the funds are in accounts which aren’t available until 59. I have a pension at 62 which would provide health coverage for life and not much more. SS as well. My partner has income from internet business which covers our expenses but may not last. My full time job is stressful and taking a toll. Would love to cut back but have reservations.

My question is: have any bogleheads essentially stopped investing once near their number at an age before planned retirement? Perhaps take an easier job or drastically cut back to just cover expenses and let their portfolio grow until retirement age? How did it work out for you?
am,

This statement is not true. Check out the following URL.


https://www.madfientist.com/how-to-acce ... nds-early/

<<My partner has income from internet business which covers our expenses but may not last. >>


Do your numbers covers your partner's retirement too? Do you plan to support your partner?

<<My question is: have any bogleheads essentially stopped investing once near their number at an age before planned retirement?>>

No. But, I choose a lowered paying and less stressful job when my portfolio was bigger.


KlangFool
Partner and I share expenses so it’s for both of us.

72t option only allows a maximum of about 28,500 withdrawal right now per million due to such low interest rates. 120% of fed midterm rate is .42% right now.

https://www.bankrate.com/retirement/cal ... alculator/
72t is not a good option. Roth conversion ladder works a lot better.


KlangFool
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Re: Near number but not at retirement age

Post by Pinotage »

Watty wrote: Sat Sep 12, 2020 10:16 am
am wrote: Sat Sep 12, 2020 9:23 am Mid 40s with retirement portfolio approaching low end of my goal (about 74% there)....
Trying to slice and dice the math is tricky.

The problem is that the goal keeps moving and the magic number would be a lot different to retire, or semi-retire, at 45 than it would be when you are 62 or some other age.
Agree with this, as it becomes a puzzling titration.

The earlier the target the larger the nest egg needed.

Continuing to work and save both increases the nest egg and decreases the amount of remaining years it must cover/removes some longevity risk.

It is more of a mental problem as TimeLord alludes to. Finding yourself close to a financial goal earlier than anticipated means you have options, but maybe not at the stage you had planned to have them. So they are inherently different options.
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Re: Near number but not at retirement age

Post by cheese_breath »

am wrote: Sat Sep 12, 2020 9:23 am... I have a pension at 62 which would provide health coverage for life...
Read this to make sure it's protected before staking your future on the retiree health coverage.

https://www.dol.gov/sites/dolgov/files/ ... be-cut.pdf
The surest way to know the future is when it becomes the past.
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Re: Near number but not at retirement age

Post by am »

cheese_breath wrote: Sat Sep 12, 2020 10:34 am
am wrote: Sat Sep 12, 2020 9:23 am... I have a pension at 62 which would provide health coverage for life...
Read this to make sure it's protected before staking your future on the retiree health coverage.

https://www.dol.gov/sites/dolgov/files/ ... be-cut.pdf
This is a state pension which at this time can not cut benefits due to constitution.
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Re: Near number but not at retirement age

Post by flaccidsteele »

flaccidsteele wrote: Sat Sep 12, 2020 10:23 am Yes

I expected to retire around 55

I retired in my 40s. It worked out well. Personally it was challenging going through withdrawal from the addiction of regular pay

Once withdrawal symptoms go away you get over it because you no longer need to trade your Life for money
I misread OP
am wrote: Sat Sep 12, 2020 9:23 am My question is: have any bogleheads essentially stopped investing once near their number at an age before planned retirement?
I’ll never stop investing. Ever. It’s simple and I enjoy it.
The US market always recovers. It’s never different this time. Retired in my 40s. Investing is a simple game of rinse and repeat
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Re: Near number but not at retirement age

Post by runner540 »

Brianmcg321 wrote: Sat Sep 12, 2020 10:13 am I’m at that point now. 47 and have hit seven figures. That was my goal by 60. If I don’t contribute another dime will have almost $3mil by 60.

I’ve reduced my retirement savings from 25% to just 6% (to get company match in 401k).

We have decided to upgrade our cars and spend more money on our home renovation.
If you have $1MM today and expect it to grow to $3MM in 13 years, you are assuming ~9% annual growth. That is aggressive!
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Re: Near number but not at retirement age

Post by bampf »

I have run the numbers 100 different ways and a couple hundred times to figure out what I need to stop trading work for money. I don't have a concrete answer, but, my calculations have been heavily influenced by the likelihood of my being dead at a given age, a 4% withdrawal rate, knowing my current expenses and predicting my future expenses.

I have a scenario that I call my glide scenario where I know how much taxable I can spend every month until I hit 59.5. That number goes up every month (one month closer to the magic age).

I have a scenario where I run simulations on just one retirement account and don't touch it until I hit 65 and it hits my number for basics.

I have a few scenarios that include SS and that don't include it.

A lot of words to say that I feel like I could never contribute another $ to my "retirement accounts" and still be fine, which puts a lot less stress on my choice to continue working. Part of why I continue to work is so I can help out family and the charities I like. I also mostly enjoy my job (its still me trading time for money though).

So, lot of words to say yes, I have considered not adding any more money to savings, stopping work entirely and scenarios in between. Its a valuable exercise.
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Re: Near number but not at retirement age

Post by cheese_breath »

am wrote: Sat Sep 12, 2020 10:37 am
cheese_breath wrote: Sat Sep 12, 2020 10:34 am
am wrote: Sat Sep 12, 2020 9:23 am... I have a pension at 62 which would provide health coverage for life...
Read this to make sure it's protected before staking your future on the retiree health coverage.

https://www.dol.gov/sites/dolgov/files/ ... be-cut.pdf
This is a state pension which at this time can not cut benefits due to constitution.
Good for you. :thumbsup
The surest way to know the future is when it becomes the past.
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Re: Near number but not at retirement age

Post by jimkinny »

I cut back my hours and worked part time for 5-6 years until I was 3-4 months away from Medicare qualification age. It worked fine for me. I missed out on saving during those years and had a scare in 2008 but thankfully the markets recovered fairly quickly.

If needed, I could have returned to full time work.

I am still happy I had the extra time off from work and would do it again.
Last edited by jimkinny on Sat Sep 12, 2020 11:55 am, edited 1 time in total.
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Re: Near number but not at retirement age

Post by LatentStoic »

cheese_breath wrote: Sat Sep 12, 2020 10:34 am
am wrote: Sat Sep 12, 2020 9:23 am... I have a pension at 62 which would provide health coverage for life...
Read this to make sure it's protected before staking your future on the retiree health coverage.

https://www.dol.gov/sites/dolgov/files/ ... be-cut.pdf
Thank you for sharing that link, cheese_breath. Valuable for us near-retirees who currently expect to have retiree health coverage from megacorp, but who are also planning / modeling around ACA and other health insurance scenarios.
Aphorism still under construction.
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Re: Near number but not at retirement age

Post by sycamore »

runner540 wrote: Sat Sep 12, 2020 10:51 am
Brianmcg321 wrote: Sat Sep 12, 2020 10:13 am I’m at that point now. 47 and have hit seven figures. That was my goal by 60. If I don’t contribute another dime will have almost $3mil by 60.

I’ve reduced my retirement savings from 25% to just 6% (to get company match in 401k).

We have decided to upgrade our cars and spend more money on our home renovation.
If you have $1MM today and expect it to grow to $3MM in 13 years, you are assuming ~9% annual growth. That is aggressive!
It does seem high given current valuations but 9% CAGR is within the range of what's possible. I'm guessing 90%+ stock allocation?
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Brianmcg321
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Re: Near number but not at retirement age

Post by Brianmcg321 »

sycamore wrote: Sat Sep 12, 2020 11:59 am
runner540 wrote: Sat Sep 12, 2020 10:51 am
Brianmcg321 wrote: Sat Sep 12, 2020 10:13 am I’m at that point now. 47 and have hit seven figures. That was my goal by 60. If I don’t contribute another dime will have almost $3mil by 60.

I’ve reduced my retirement savings from 25% to just 6% (to get company match in 401k).

We have decided to upgrade our cars and spend more money on our home renovation.
If you have $1MM today and expect it to grow to $3MM in 13 years, you are assuming ~9% annual growth. That is aggressive!
It does seem high given current valuations but 9% CAGR is within the range of what's possible. I'm guessing 90%+ stock allocation?
Only 8%. Im still adding $1000 a month with my 6% and company match. Not counting the 3.5% salary increase each year I have averaged.

That being said, don’t need 3mil to retire. I only needed 1. So if I only get a 3-4% return I’m still golden.
Rules to investing: | 1. Don't lose money. | 2. Don't forget rule number 1.
runner540
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Re: Near number but not at retirement age

Post by runner540 »

Brianmcg321 wrote: Sat Sep 12, 2020 12:23 pm
sycamore wrote: Sat Sep 12, 2020 11:59 am
runner540 wrote: Sat Sep 12, 2020 10:51 am
Brianmcg321 wrote: Sat Sep 12, 2020 10:13 am I’m at that point now. 47 and have hit seven figures. That was my goal by 60. If I don’t contribute another dime will have almost $3mil by 60.

I’ve reduced my retirement savings from 25% to just 6% (to get company match in 401k).

We have decided to upgrade our cars and spend more money on our home renovation.
If you have $1MM today and expect it to grow to $3MM in 13 years, you are assuming ~9% annual growth. That is aggressive!
It does seem high given current valuations but 9% CAGR is within the range of what's possible. I'm guessing 90%+ stock allocation?
Only 8%. Im still adding $1000 a month with my 6% and company match. Not counting the 3.5% salary increase each year I have averaged.

That being said, don’t need 3mil to retire. I only needed 1. So if I only get a 3-4% return I’m still golden.
Make sure your goal and estimated returns are both nominal or both real. Mixing a nominal rate of return without adjusting the goal for inflation will make you overconfident.
tesuzuki2002
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Re: Near number but not at retirement age

Post by tesuzuki2002 »

Brianmcg321 wrote: Sat Sep 12, 2020 10:13 am I’m at that point now. 47 and have hit seven figures. That was my goal by 60. If I don’t contribute another dime will have almost $3mil by 60.

I’ve reduced my retirement savings from 25% to just 6% (to get company match in 401k).

We have decided to upgrade our cars and spend more money on our home renovation.
I'm nearing this approach myself.... I don't have a strong reason to back off just yet... Career is going well and stock options vesting for the next 3 years so I am holding thru that period. Plan to reduce contributions to live a little and let the market do the rest.
Beehave
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Re: Near number but not at retirement age

Post by Beehave »

Are you in the medicine field with an MD, DO, or other advanced degree? Have you considered teaching?

As someone mentioned above, retiring from stress to college-level teaching can keep you feeling productive in a lower-stress environment. There are large numbers of college students seeking to enter some aspect of the medical field. The community collge at which I teach is bursting with such students seeking entry to health professions (EMT, nursing, radiology, physical therapy, etc.) which will provide them with steady and meaningful employment.

If you work for a public college system in a full-time position you may work towards a pension as well as whatever salary you get. Any salary in retirement beats no salary by far from the financial perspective -- even part-time. It pays for some base expenses and depending on level, possibly (in the distance for you) the tax on your 401k/IRA RMD withdrawals or (at your age) the tax on withdrawals to perform Roth conversions to protect against future taxation. (What I mean is if you are in a 20% tax bracket and earn $8000 teaching part-time, dedicating the money you earned teaching to paying tax on withdrawals would "cover" the taxes owed on close to a $40,000 IRA/401k withdrawal. So psychologically, if you choose to look at it in this way, you can see yourself as doing "volunteer" work that benefits the community and in return you get to do tax-free withdrawals from your retirement funds.)

Best wishes.
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bottlecap
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Re: Near number but not at retirement age

Post by bottlecap »

Within a few years, the market will take care of this concern for you.

Theoretically I could retire with at least 15 years to go yet. But I don’t think for a second that I’ll have as much in my retirement accounts in 5 years as I do now.

JT
hmw
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Re: Near number but not at retirement age

Post by hmw »

OP, are you a MD? I am just curious as how you plan to work less? I haven't seen a lot of part time jobs out there unless you are in certain specialities like ER or anesthesia.

I am a surgeon. I don't know any part-timer in my specialty. I am in my mid-40's. I am pretty close to FI but I don't think I want to quit working now because I won't know what to do with my time and also it is almost impossible to come back to medicine in the future. My plan is to look for less stressful jobs with lower pay in a few years. The current pandemic has changed the job market for my specialty. Things may improve in a few years.
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am
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Re: Near number but not at retirement age

Post by am »

hmw wrote: Sat Sep 12, 2020 4:56 pm OP, are you a MD? I am just curious as how you plan to work less? I haven't seen a lot of part time jobs out there unless you are in certain specialities like ER or anesthesia.

I am a surgeon. I don't know any part-timer in my specialty. I am in my mid-40's. I am pretty close to FI but I don't think I want to quit working now because I won't know what to do with my time and also it is almost impossible to come back to medicine in the future. My plan is to look for less stressful jobs with lower pay in a few years. The current pandemic has changed the job market for my specialty. Things may improve in a few years.
There are part time jobs in my specialty. I am tired of the hours, stress and productivity requirements. I am less tolerant because I don’t have to work as much given my current financial situation.

I have had some minor health issues of recent which may or may not be due to stress. There is a chance I may be working for my heirs at this point. I don’t really enjoy practicing my specialty for 45-50 hrs a week and at odd hours.

Very confused as to what to do next. Keep plugging away and without question pass the finish line in terms of financial independence (pretty close as 2 yrs of savings and below avg. market would do it), go part time, find another part time job somewhere else that’s less malignant, leave medicine and teach, work on a blog, etc.
Tattarrattat
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Re: Near number but not at retirement age

Post by Tattarrattat »

I think retiring from being an MD is different than most other fields. The sunk costs of years of training and delayed gratification, the emotional identification with the profession, the prestige, the altruistic satisfaction of much of the work. It's just much harder than leaving a corporate job. Many MDs can't think of themselves as a complete person without the job. This is why you see so many of them working into their elderly years until their health completely breaks down.
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am
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Re: Near number but not at retirement age

Post by am »

Tattarrattat wrote: Sat Sep 12, 2020 5:56 pm I think retiring from being an MD is different than most other fields. The sunk costs of years of training and delayed gratification, the emotional identification with the profession, the prestige, the altruistic satisfaction of much of the work. It's just much harder than leaving a corporate job. Many MDs can't think of themselves as a complete person without the job. This is why you see so many of them working into their elderly years until their health completely breaks down.
Well said. Makes it much harder to retire then say a middle manager at a corporation in my opinion. It pays well also so that a very part time position may allow a frugal specialist to never touch his portfolio.
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