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

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new2bogle
Posts: 1359
Joined: Fri Sep 11, 2009 2:05 pm

Re: KF's Worst Case Retirement Plan

Post by new2bogle » Thu Jun 08, 2017 10:59 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
KF,

1) May I ask the field/industry of your employment?

2) Also, is it age discrimination or racial/ethnic discrimination? I have seen both in my industry.

Thanks.

KlangFool
Posts: 10721
Joined: Sat Oct 11, 2008 12:35 pm

Re: KF's Worst Case Retirement Plan

Post by KlangFool » Thu Jun 08, 2017 11:05 am

new2bogle 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
KF,

1) May I ask the field/industry of your employment?

2) Also, is it age discrimination or racial/ethnic discrimination? I have seen both in my industry.

Thanks.
new2bogle,

1) IT/networking

2) Age discrimination. I do not see a racial/ethnic pattern to this.

KlangFool

new2bogle
Posts: 1359
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Re: KF's Worst Case Retirement Plan

Post by new2bogle » Thu Jun 08, 2017 11:13 am

KlangFool wrote:
new2bogle 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
KF,

1) May I ask the field/industry of your employment?

2) Also, is it age discrimination or racial/ethnic discrimination? I have seen both in my industry.

Thanks.
new2bogle,

1) IT/networking

2) Age discrimination. I do not see a racial/ethnic pattern to this.

KlangFool
Thanks.

You mentioned living in your home country. Is that a choice you want or only a "last resort" choice? I have seen many of my colleagues go back to their native India after working in the U.S. for 10-15 years. Having family there helps.

KlangFool
Posts: 10721
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Re: KF's Worst Case Retirement Plan

Post by KlangFool » Thu Jun 08, 2017 11:29 am

new2bogle wrote:
Thanks.

You mentioned living in your home country. Is that a choice you want or only a "last resort" choice? I have seen many of my colleagues go back to their native India after working in the U.S. for 10-15 years. Having family there helps.
new2bogle,

Half of our family is back there. It will be hard for our kids since they probably will be in the USA. As for us, not sure how we will feel about this.

KlangFool

lazydavid
Posts: 1887
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Re: KF's Worst Case Retirement Plan

Post by lazydavid » Thu Jun 08, 2017 12:01 pm

KlangFool wrote: new2bogle,

1) IT/networking

2) Age discrimination. I do not see a racial/ethnic pattern to this.

KlangFool
When the time comes, if you're willing to consider a move to either Illinois or Florida, let me know. If your skills are a decent fit and I have an opening, I'd be more than happy to have you. Probably wouldn't be able to pay what you're making now, but COL is much lower and benefits are outstanding. Though my whole team is currently young to middle-aged, that's happenstance rather than prejudice. And we're certainly a diverse group. When I took over the department it was 100% white male, and I'm the only one left fitting that description, though I do have a late 40's white guy starting on Monday. :)

smitcat
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Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by smitcat » Thu Jun 08, 2017 12:04 pm

"though I do have a late 40's white guy starting on Monday. :)"

Glad to see you are hiring minorities !!!!

lazydavid
Posts: 1887
Joined: Wed Apr 06, 2016 1:37 pm

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

Post by lazydavid » Thu Jun 08, 2017 12:31 pm

smitcat wrote:"though I do have a late 40's white guy starting on Monday. :)"

Glad to see you are hiring minorities !!!!
LOL. Like I said, he'll be the only one. And again it's happenstance. I pretty much only get qualified candidates by referral or by sourcing myself, and he used to work with our security engineer at another company. I have high standards (it's a small team with a LOT of responsibility), but don't care in the slightest what age or ethnicity a candidate is.

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

Re: KF's Worst Case Retirement Plan

Post by KlangFool » Thu Jun 08, 2017 1:07 pm

lazydavid wrote:
KlangFool wrote: new2bogle,

1) IT/networking

2) Age discrimination. I do not see a racial/ethnic pattern to this.

KlangFool
When the time comes, if you're willing to consider a move to either Illinois or Florida, let me know.
lazydavid,

Thanks for the offer. But, financially, if I am moving away from this HCOL area, I can retire.

KlangFool

lgerla
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Joined: Tue Jan 31, 2017 10:07 pm

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

Post by lgerla » Sun Jun 11, 2017 10:53 pm

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.
KF,

I looked into this for my own situation in Virginia as I have the same concern. I believe it depends on the school, but it is possible that once residency is established at the start, they do not revoke it if the parents move.

See this for example: http://www.accounting.vcu.edu/tuition/

KlangFool
Posts: 10721
Joined: Sat Oct 11, 2008 12:35 pm

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

Post by KlangFool » Mon Jun 12, 2017 8:30 am

lgerla wrote:
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.
KF,

I looked into this for my own situation in Virginia as I have the same concern. I believe it depends on the school, but it is possible that once residency is established at the start, they do not revoke it if the parents move.

See this for example: http://www.accounting.vcu.edu/tuition/
lgerla,

Thanks. In my case, with my son starting the third year and my daughter in the second year, I probably not going to move anywhere outside of Virginia over the next 3 years.

KlangFool

jlcnuke
Posts: 434
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Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by jlcnuke » Mon Jun 12, 2017 9:39 am

KlangFool wrote: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, 40K without the mortgage. Out of that 40K/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
FIRECalc says 100% chance of success assuming $20k for your and $10k for your spouse at 62 using $40k/year spending +$20k/year mortgage for the next 24 years.

Looks okay to me. Though $20k/year for all spending outside of health insurance and mortgage payments seems pretty darn low to me.

KlangFool
Posts: 10721
Joined: Sat Oct 11, 2008 12:35 pm

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

Post by KlangFool » Mon Jun 12, 2017 9:47 am

jlcnuke wrote:
Looks okay to me. Though $20k/year for all spending outside of health insurance and mortgage payments seems pretty darn low to me.
jlcnuke,

1) This is how we lived over the past 10 to 20 years. Conversely, we do not know and understand why others need a lot more to live.

2) Coming from a culture where the average gross saving rate is at 30+% for the whole country. Plus, many folks save 50+% of their gross income. So, I guess it is built into our lifestyles.

3) No, it has nothing to do with income. We were in abject poverty through childhood but our parents still save.

KlangFool

wrongfunds
Posts: 1913
Joined: Tue Dec 21, 2010 3:55 pm

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

Post by wrongfunds » Mon Jun 12, 2017 11:50 am

I suspect most of us are curious as to how you are able to keep the expenses so low. Do you pay for multiple cell phones and plans? Do you run the air conditioning in Northern Virginia summer? Do you pay for internet? Do you pay for water? Car insurance? Gasoline? Car repairs/maintenance? etc? Fairfax and surrounding counties are not exactly known for low cost of living.

I suspect your breakdown could help rest of us to understand where we could cut down without much affecting the overall quality of life.

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

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

Post by KlangFool » Mon Jun 12, 2017 12:05 pm

wrongfunds wrote:I suspect most of us are curious as to how you are able to keep the expenses so low. Do you pay for multiple cell phones and plans? Do you run the air conditioning in Northern Virginia summer? Do you pay for internet? Do you pay for water? Car insurance? Gasoline? Car repairs/maintenance? etc? Fairfax and surrounding counties are not exactly known for low cost of living.

I suspect your breakdown could help rest of us to understand where we could cut down without much affecting the overall quality of life.
wrongfunds,

You need to understand is in order to live at this cost level, your thought process cannot be like below:

<< I suspect most of us are curious as to how you are able to keep the expenses so low. Do you pay for multiple cell phones and plans? Do you run the air conditioning in Northern Virginia summer? Do you pay for internet? Do you pay for water? Car insurance? Gasoline? Car repairs/maintenance? etc? Fairfax and surrounding counties are not exactly known for low cost of living.>>

1) I do "Pay Yourself First". I save 30+% of my gross income. Then, I live on the rest (20K per year). Those spending money are debited straight to my checking account. I cannot spend the money that I do not have.

If you look carefully at your budget, basic food and utility do not cost more than 20K per year.

2) Do not live in a neighborhood with your peers. Live in a neighborhood with lower-income folks. My peers lived in the single-family home. I live in a townhouse.

KlangFool

wrongfunds
Posts: 1913
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Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by wrongfunds » Mon Jun 12, 2017 1:23 pm

Just the internet and cellphone bill with couple of kids will eat sizeable chunk of that $20K budget. With kid drivers on the car insurance plan, there goes four digit outlay just for auto liability. I have not even yet added personal liability insurance to the mix. Talking about townhomes in Norther Virginia, they push towards half a million. I don't see decrepit cars up on the cement blocks in the townhomes neighborhood! I am talking about my own personal experience from Reston/Herndon area. I suspect adjoining counties are somewhat similar. I agree with you that food costs are trivial when one cooks at home but rest of the fixed costs that I am having trouble with $1500 per month budget.

Many have asked for clarification on how it is possible to survive with $20K budget with few kids in college age.

KlangFool
Posts: 10721
Joined: Sat Oct 11, 2008 12:35 pm

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

Post by KlangFool » Mon Jun 12, 2017 1:37 pm

wrongfunds wrote:Just the internet and cellphone bill with couple of kids will eat sizeable chunk of that $20K budget. With kid drivers on the car insurance plan, there goes four digit outlay just for auto liability. I have not even yet added personal liability insurance to the mix. Talking about townhomes in Norther Virginia, they push towards half a million. I don't see decrepit cars up on the cement blocks in the townhomes neighborhood! I am talking about my own personal experience from Reston/Herndon area. I suspect adjoining counties are somewhat similar. I agree with you that food costs are trivial when one cooks at home but rest of the fixed costs that I am having trouble with $1500 per month budget.

Many have asked for clarification on how it is possible to survive with $20K budget with few kids in college age.
wrongfunds,

1) It does not include my 2 kids' college education cost. It is about 50K to 60K per year.

<< Just the internet and cellphone bill with couple of kids will eat sizeable chunk of that $20K budget.>>

2) Cell phone for 4 -> $160 per month. Internet / Fios / Wired Phone/ Cable TV -> $120 per month.

<< With kid drivers on the car insurance plan, there goes four digit outlay just for auto liability.>>

3) Car insurance -> $1,710 with 2 teenage drivers. Umbrella insurance = $420.

<<Talking about townhomes in Norther Virginia, they push towards half a million. >>

4) 400K. I am further away from Reston/Herndon.

5)Utility -> Water/ Gas/Electric -> $200 per month.

It adds up to about $7,890. Let's say 8K. It leaves 1K per month to spend on food and gas.

KlangFool
Last edited by KlangFool on Mon Jun 12, 2017 1:49 pm, edited 2 times in total.

Jags4186
Posts: 2639
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Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by Jags4186 » Mon Jun 12, 2017 1:41 pm

wrongfunds wrote:Just the internet and cellphone bill with couple of kids will eat sizeable chunk of that $20K budget. With kid drivers on the car insurance plan, there goes four digit outlay just for auto liability. I have not even yet added personal liability insurance to the mix. Talking about townhomes in Norther Virginia, they push towards half a million. I don't see decrepit cars up on the cement blocks in the townhomes neighborhood! I am talking about my own personal experience from Reston/Herndon area. I suspect adjoining counties are somewhat similar. I agree with you that food costs are trivial when one cooks at home but rest of the fixed costs that I am having trouble with $1500 per month budget.

Many have asked for clarification on how it is possible to survive with $20K budget with few kids in college age.
It's very possible, many people around the country do it every day. The reality is many people who have the means wouldn't want to live that way. Staycations vs vacations. Basic phones vs. smartphones. Basic internet vs full triple play package. Fans vs running the AC 24/7 in the summer. No eating out. No weekend jaunts. Shopping at Kohls vs Bloomingdales.

Also, please note that lots of parent's don't pay for the children's cell phone. When I turned 18 and I was in college, even though my parents paid for my college, I had to pay for my own cell phone. And this was 13 years ago.

If that is how KF chooses to live that's great! It allows him the flexibility to be able to retire if he were to get canned this afternoon.

yellowgirl
Posts: 179
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Location: Texas

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

Post by yellowgirl » Mon Jun 12, 2017 1:53 pm

wrongfunds wrote:Just the internet and cellphone bill with couple of kids will eat sizeable chunk of that $20K budget. With kid drivers on the car insurance plan, there goes four digit outlay just for auto liability. I have not even yet added personal liability insurance to the mix. Talking about townhomes in Norther Virginia, they push towards half a million. I don't see decrepit cars up on the cement blocks in the townhomes neighborhood! I am talking about my own personal experience from Reston/Herndon area. I suspect adjoining counties are somewhat similar. I agree with you that food costs are trivial when one cooks at home but rest of the fixed costs that I am having trouble with $1500 per month budget.

Many have asked for clarification on how it is possible to survive with $20K budget with few kids in college age.

Our monthly bills are about $1,100 a month. This total includes property tax, homeowner insurance, electricity, water, trash, phones, internet, cars insurance, and gas. However, we live in Texas not Virginia.

aristotelian
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Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by aristotelian » Mon Jun 12, 2017 1:57 pm

KlangFool wrote: 2) Cell phone for 4 -> $160 per month. Internet / Fios / Wired Phone/ Cable TV -> $120 per month.
I pay $40 per month for internet. Got rid of wired phone and cut the cord and watch TV on Netflix for $10 per month. That should get you down to $19K expenses!

ikowik
Posts: 126
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Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by ikowik » Mon Jun 12, 2017 1:59 pm

KlangFool wrote:
wrongfunds wrote:Just the internet and cellphone bill with couple of kids will eat sizeable chunk of that $20K budget. With kid drivers on the car insurance plan, there goes four digit outlay just for auto liability. I have not even yet added personal liability insurance to the mix. Talking about townhomes in Norther Virginia, they push towards half a million. I don't see decrepit cars up on the cement blocks in the townhomes neighborhood! I am talking about my own personal experience from Reston/Herndon area. I suspect adjoining counties are somewhat similar. I agree with you that food costs are trivial when one cooks at home but rest of the fixed costs that I am having trouble with $1500 per month budget.

Many have asked for clarification on how it is possible to survive with $20K budget with few kids in college age.
wrongfunds,

1) It does not include my 2 kids' college education cost. It is about 50K to 60K per year.

<< Just the internet and cellphone bill with couple of kids will eat sizeable chunk of that $20K budget.>>

2) Cell phone for 4 -> $160 per month. Internet / Fios / Wired Phone/ Cable TV -> $120 per month.

<< With kid drivers on the car insurance plan, there goes four digit outlay just for auto liability.>>

3) Car insurance -> $1,710 with 2 teenage drivers. Umbrella insurance = $420.

<<Talking about townhomes in Norther Virginia, they push towards half a million. >>

4) 400K. I am further away from Reston/Herndon.

5)Utility -> Water/ Gas/Electric -> $200 per month.

It adds up to about $7,890. Let's say 8K. It leaves 1K per month to spend on food and gas.

KlangFool
Property tax? Auto registration charge? Periodic outlays for appliance repairs/ replacement?

Interesting discussion. Wishing you good luck, but I agree with some here that 20 k/ year sounds tight

KlangFool
Posts: 10721
Joined: Sat Oct 11, 2008 12:35 pm

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

Post by KlangFool » Mon Jun 12, 2017 2:00 pm

yellowgirl wrote:
wrongfunds wrote:Just the internet and cellphone bill with couple of kids will eat sizeable chunk of that $20K budget. With kid drivers on the car insurance plan, there goes four digit outlay just for auto liability. I have not even yet added personal liability insurance to the mix. Talking about townhomes in Norther Virginia, they push towards half a million. I don't see decrepit cars up on the cement blocks in the townhomes neighborhood! I am talking about my own personal experience from Reston/Herndon area. I suspect adjoining counties are somewhat similar. I agree with you that food costs are trivial when one cooks at home but rest of the fixed costs that I am having trouble with $1500 per month budget.

Many have asked for clarification on how it is possible to survive with $20K budget with few kids in college age.

Our monthly bills are about $1,100 a month. This total includes property tax, homeowner insurance, electricity, water, trash, phones, internet, cars insurance, and gas. However, we live in Texas not Virginia.
yellowgirl,

My 20K per year exclude mortgage, homeowner insurance, property tax, and all medical expenses. Aka, no housing and medical expenses.

KlangFool

KlangFool
Posts: 10721
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Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by KlangFool » Mon Jun 12, 2017 2:03 pm

aristotelian wrote:
KlangFool wrote: 2) Cell phone for 4 -> $160 per month. Internet / Fios / Wired Phone/ Cable TV -> $120 per month.
I pay $40 per month for internet. Got rid of wired phone and cut the cord and watch TV on Netflix for $10 per month. That should get you down to $19K expenses!
aristotelian,

LOL!! I do not budget. My whole goal of "Pay Yourself First" and save 30+%of my gross income is I do not need to worry about that small money.

KlangFool

yellowgirl
Posts: 179
Joined: Sun Feb 08, 2015 10:12 pm
Location: Texas

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

Post by yellowgirl » Mon Jun 12, 2017 2:05 pm

KlangFool wrote:
yellowgirl wrote:
wrongfunds wrote:Just the internet and cellphone bill with couple of kids will eat sizeable chunk of that $20K budget. With kid drivers on the car insurance plan, there goes four digit outlay just for auto liability. I have not even yet added personal liability insurance to the mix. Talking about townhomes in Norther Virginia, they push towards half a million. I don't see decrepit cars up on the cement blocks in the townhomes neighborhood! I am talking about my own personal experience from Reston/Herndon area. I suspect adjoining counties are somewhat similar. I agree with you that food costs are trivial when one cooks at home but rest of the fixed costs that I am having trouble with $1500 per month budget.

Many have asked for clarification on how it is possible to survive with $20K budget with few kids in college age.

Our monthly bills are about $1,100 a month. This total includes property tax, homeowner insurance, electricity, water, trash, phones, internet, cars insurance, and gas. However, we live in Texas not Virginia.
yellowgirl,

My 20K per year exclude mortgage, homeowner insurance, property tax, and all medical expenses. Aka, no housing and medical expenses.

KlangFool
If this is the case, you are living in luxury!

KlangFool
Posts: 10721
Joined: Sat Oct 11, 2008 12:35 pm

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

Post by KlangFool » Mon Jun 12, 2017 2:08 pm

ikowik wrote:
Property tax? Auto registration charge? Periodic outlays for appliance repairs/ replacement?

Interesting discussion. Wishing you good luck, but I agree with some here that 20 k/ year sounds tight
ikowik,

<<Property tax? >.

Not included. Part of 20K housing expense.

KlangFool

wrongfunds
Posts: 1913
Joined: Tue Dec 21, 2010 3:55 pm

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

Post by wrongfunds » Mon Jun 12, 2017 2:09 pm

Thanks KF! Our utility costs are much higher but rest of the other numbers should be within ballpark excluding the discretionary spending. I often wonder where are we spending our dollars if 3 cars in the household has 210K+ miles each and minimum age is 18 years!

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

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

Post by KlangFool » Mon Jun 12, 2017 2:10 pm

yellowgirl wrote:
KlangFool wrote:
yellowgirl wrote:
wrongfunds wrote:Just the internet and cellphone bill with couple of kids will eat sizeable chunk of that $20K budget. With kid drivers on the car insurance plan, there goes four digit outlay just for auto liability. I have not even yet added personal liability insurance to the mix. Talking about townhomes in Norther Virginia, they push towards half a million. I don't see decrepit cars up on the cement blocks in the townhomes neighborhood! I am talking about my own personal experience from Reston/Herndon area. I suspect adjoining counties are somewhat similar. I agree with you that food costs are trivial when one cooks at home but rest of the fixed costs that I am having trouble with $1500 per month budget.

Many have asked for clarification on how it is possible to survive with $20K budget with few kids in college age.

Our monthly bills are about $1,100 a month. This total includes property tax, homeowner insurance, electricity, water, trash, phones, internet, cars insurance, and gas. However, we live in Texas not Virginia.
yellowgirl,

My 20K per year exclude mortgage, homeowner insurance, property tax, and all medical expenses. Aka, no housing and medical expenses.

KlangFool
If this is the case, you are living in luxury!
yellowgirl,

1) I know I am. I do not know why others think that I am spending very little money.

2) I used to spend a lot less when I was in Texas.

KlangFool

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

Post by KlangFool » Mon Jun 12, 2017 2:12 pm

wrongfunds wrote:Thanks KF! Our utility costs are much higher but rest of the other numbers should be within ballpark excluding the discretionary spending. I often wonder where are we spending our dollars if 3 cars in the household has 210K+ miles each and minimum age is 18 years!
wrongfunds,

I have 2 cars: 2006 Nissan Altima and 2014 Nissan Altima. I only buy the new car. That is the luxury I choose to have.

KlangFool

new2bogle
Posts: 1359
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Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by new2bogle » Mon Jun 12, 2017 2:14 pm

yellowgirl wrote:
wrongfunds wrote:Just the internet and cellphone bill with couple of kids will eat sizeable chunk of that $20K budget. With kid drivers on the car insurance plan, there goes four digit outlay just for auto liability. I have not even yet added personal liability insurance to the mix. Talking about townhomes in Norther Virginia, they push towards half a million. I don't see decrepit cars up on the cement blocks in the townhomes neighborhood! I am talking about my own personal experience from Reston/Herndon area. I suspect adjoining counties are somewhat similar. I agree with you that food costs are trivial when one cooks at home but rest of the fixed costs that I am having trouble with $1500 per month budget.

Many have asked for clarification on how it is possible to survive with $20K budget with few kids in college age.

Our monthly bills are about $1,100 a month. This total includes property tax, homeowner insurance, electricity, water, trash, phones, internet, cars insurance, and gas. However, we live in Texas not Virginia.
I live in Texas and my monthly property bill is ~$1,000, prop tax is very high for a house "worth" $450k.

new2bogle
Posts: 1359
Joined: Fri Sep 11, 2009 2:05 pm

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

Post by new2bogle » Mon Jun 12, 2017 2:17 pm

KlangFool wrote: aristotelian,

LOL!! I do not budget. My whole goal of "Pay Yourself First" and save 30+%of my gross income is I do not need to worry about that small money.

KlangFool
I like your style KF, which is what I do too. I learned that from my father who is a prodigious saver.

yellowgirl
Posts: 179
Joined: Sun Feb 08, 2015 10:12 pm
Location: Texas

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

Post by yellowgirl » Mon Jun 12, 2017 2:19 pm

new2bogle wrote:
yellowgirl wrote:
wrongfunds wrote:Just the internet and cellphone bill with couple of kids will eat sizeable chunk of that $20K budget. With kid drivers on the car insurance plan, there goes four digit outlay just for auto liability. I have not even yet added personal liability insurance to the mix. Talking about townhomes in Norther Virginia, they push towards half a million. I don't see decrepit cars up on the cement blocks in the townhomes neighborhood! I am talking about my own personal experience from Reston/Herndon area. I suspect adjoining counties are somewhat similar. I agree with you that food costs are trivial when one cooks at home but rest of the fixed costs that I am having trouble with $1500 per month budget.

Many have asked for clarification on how it is possible to survive with $20K budget with few kids in college age.

Our monthly bills are about $1,100 a month. This total includes property tax, homeowner insurance, electricity, water, trash, phones, internet, cars insurance, and gas. However, we live in Texas not Virginia.
I live in Texas and my monthly property bill is ~$1,000, prop tax is very high for a house "worth" $450k.
Not every county tax at the same rate.

KlangFool
Posts: 10721
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Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by KlangFool » Mon Jun 12, 2017 2:21 pm

new2bogle wrote: I live in Texas and my monthly property bill is ~$1,000, prop tax is very high for a house "worth" $450k.
new2bogle,

Yes, but you do not pay state income tax. My property tax plus state income tax is probably about the same as your property tax. And, I bought a cheaper house. Most of my peers lived in 500K to 600K houses.

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

Post by KlangFool » Mon Jun 12, 2017 2:24 pm

new2bogle wrote:
KlangFool wrote: aristotelian,

LOL!! I do not budget. My whole goal of "Pay Yourself First" and save 30+%of my gross income is I do not need to worry about that small money.

KlangFool
I like your style KF, which is what I do too. I learned that from my father who is a prodigious saver.
new2bogle,

This is what I observed. People that save a lot (30% to 50% gross income) tend not to budget. People that save less tend to budget.

KlangFool

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

Post by LadyGeek » Mon Jun 12, 2017 3:40 pm

The discussion is straying from the OP's request. Please stay on-topic, which is:
KlangFool wrote: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, 40K without the mortgage. Out of that 40K/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
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Re: KF's Worst Case Retirement Plan

Post by randomguy » Mon Jun 12, 2017 4:51 pm

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.
When did you turn into such an optimist? Go all out with medical expenses of 100k/yr (i.e one partner needs to be in a nursing home full time. Or to be really grim what if one of your kids needs 50k/year of medical care for the rest of their life), 10% inflation ravaging bond values, japanese stock market 33% SS cuts, housing market crash from mortgage rates going 20%, and we haven't even talked about really bad events yet like Wiemar germany inflation, Russia/china/Cuba revolutions.

At a high level 1 million bucks to fund a 15 year retirement is pretty darn safe. You are going to need something to go really wrong where either the money goes away (hyper inflation, markets ceasing to exist, large cuts to SS/Medicare) or you expense go way up (health care is the likely one. Taxes could be but are pretty unlikely)

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

Post by patriciamgr2 » Mon Jun 12, 2017 8:15 pm

This OP is extremely knowledgeable & perhaps has taken all of these into account. As a reference for the rest of us, I note three areas where retirees (whom I've met through volunteer work) encounter retirement "surprises":

1. If part of the savings is in other than taxable accounts, be sure to calculate taxes on voluntary withdrawals and forced RMDs (& impacts on Obamacare premiums pre-Medicare, and Social Security taxes and Medicare costs post age-65). Income taxes get included with property and local income taxes as expenses, or only include net income in your estimates.

2. Especially with health care legislation in flux, retirees aren't able to project health care spending (even assuming no surprises in health condition--which unfortunately do occur more frequently as one ages). Mistakes I've seen most often are (a) failure to assess whether the ACA networks will meet their needs; and (b) failure to budget for non-covered expenses like dental work.

If Trumpcare provides for more people to be placed in high risk pools, & medical expenses were to cease to be tax-deductible, one's expense estimates may be too low. In the old days my state's high risk pool charged approximately $2K per person per month for limited coverage. None of us has any idea what will occur in the future--obviously--and speculation about tax & health care legislation is against Forum rules, so having a large contingency seems the only way to address this. I will say, however, that a $10/hour job with decent medical coverage MIGHT be worthwhile if your state adopts a health care system which has a strict definition of pre-existing conditions.

3. If a retiree wants to retain his current house, I'd suggest having a home inspection (or preparing one himself). Develop a maintenance/replacement schedule for big ticket (roof, HVAC, septic/plumbing, etc) and make sure your yearly expenses include an amortized amount for those as well as the cost estimates for routine maintenance. If you're lucky, you'll sell before needing to replace items & you can add your "replace/repair" savings to your equity and buy a smaller place for cash.

Good Luck to all early retirees.
Last edited by patriciamgr2 on Tue Jun 13, 2017 9:11 am, edited 1 time in total.

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

Post by spammagnet » Mon Jun 12, 2017 11:18 pm

KlangFool wrote:... I know I am. I do not know why others think that I am spending very little money.
I suspect many are not recognizing that you're not including housing in your expenses.

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

Post by bayview » Tue Jun 13, 2017 5:55 am

patriciamgr2 wrote:This OP is extremely knowledgeable & has perhaps taken all of these into account. As a reference for the rest of us, I note three areas where retirees (whom I've met through volunteer work) encounter retirement "surprises"...
Excellent summary. These are the three areas (fluid, shifting taxes, healthcare, and "lumpies") that have the most asterisks in our projected retirement plans.
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Re: KF's Worst Case Retirement Plan [KlangFool's]

Post by ikowik » Tue Jun 13, 2017 8:26 am

spammagnet wrote:
KlangFool wrote:... I know I am. I do not know why others think that I am spending very little money.
I suspect many are not recognizing that you're not including housing in your expenses.

This is correct for me, I did not realize property taxes were included in housing expenses. Hasty reading of the thread on my part

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

Post by KlangFool » Tue Jun 13, 2017 8:29 am

ikowik wrote:
spammagnet wrote:
KlangFool wrote:... I know I am. I do not know why others think that I am spending very little money.
I suspect many are not recognizing that you're not including housing in your expenses.

This is correct for me, I did not realize property taxes were included in housing expenses. Hasty reading of the thread on my part
ikowik,

My property tax is around $4,500 per year if it makes any difference.

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

Post by KlangFool » Tue Jun 13, 2017 8:35 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 40K/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>>

I need to make a correction. I still need to pay property tax and homeowner insurance even if I pay off the mortgage. So, my annual expense is 45K without the mortgage.

KlangFool

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

Post by smitcat » Tue Jun 13, 2017 9:32 am

KlangFool wrote:<< 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 40K/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.


IMHO - my view of early retirement when the math is this close would be to get real conservative on the funds that are available to spend.
As such the 1.0 million would need to be in a very safe portfolio mix which would not allow for much marginal growth over inflation.
My view with these parameters would be like this;

$780K = Need $60K for 13 years - age 54 to 67
$286K = Need $26K for 11 more years to pay off mortgage ($60K total less $44K SS)
$XXX = Need $1K more each year past mortgage payoff at age 78, $45K need less $44K SS

Totals run over 1.0 million so it is too tight for my thoughts.

KlangFool>>

I need to make a correction. I still need to pay property tax and homeowner insurance even if I pay off the mortgage. So, my annual expense is 45K without the mortgage.

KlangFool

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

Post by KlangFool » Tue Jun 13, 2017 9:46 am

smitcat wrote:
IMHO - my view of early retirement when the math is this close would be to get real conservative on the funds that are available to spend.
As such the 1.0 million would need to be in a very safe portfolio mix which would not allow for much marginal growth over inflation.
My view with these parameters would be like this;

$780K = Need $60K for 13 years - age 54 to 67
$286K = Need $26K for 11 more years to pay off mortgage ($60K total less $44K SS)
$XXX = Need $1K more each year past mortgage payoff at age 78, $45K need less $44K SS

Totals run over 1.0 million so it is too tight for my thoughts.
smitcat,

Thanks. So, it looks like I need something more to make this work. For example, my wife needs to keep her 15K to 20K per year job.

KlangFool

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

Post by smitcat » Tue Jun 13, 2017 10:01 am

Well - that is what I would do but I visualize early retirement costs conservatively.
In my case I would not want to retire and be 'worried' about the funds lasting so it would be better for me to make that bridge fairly certain one way or another.
That is my case anyway - YMMV as others feel differently as they should.

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

Post by delamer » Tue Jun 13, 2017 10:10 am

KlangFool wrote:
smitcat wrote:
IMHO - my view of early retirement when the math is this close would be to get real conservative on the funds that are available to spend.
As such the 1.0 million would need to be in a very safe portfolio mix which would not allow for much marginal growth over inflation.
My view with these parameters would be like this;

$780K = Need $60K for 13 years - age 54 to 67
$286K = Need $26K for 11 more years to pay off mortgage ($60K total less $44K SS)
$XXX = Need $1K more each year past mortgage payoff at age 78, $45K need less $44K SS

Totals run over 1.0 million so it is too tight for my thoughts.
smitcat,

Thanks. So, it looks like I need something more to make this work. For example, my wife needs to keep her 15K to 20K per year job.

KlangFool
I agree. With a budget as tight as yours, the $5,000 makes a significant difference. You would need an extra $125,000 in your portfolio to fund that $5,000 at a 4% withdrawal rate, for example.

FYI, we could live a comfortable life on about $35,000 a year, so your $25,000 doesn't seem out of line. The major concession we'd have to make is to cut out traveling. But the rest of our life would continue as is, and we are in a HCOL. Like you, this budget supposes a paid-off house and excludes healthcare.

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

Post by RoadHouseFan » Tue Jun 13, 2017 10:49 am

$1+ million makes you rich!

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

Post by KlangFool » Tue Jun 13, 2017 11:05 am

delamer wrote:
KlangFool wrote:
smitcat wrote:
IMHO - my view of early retirement when the math is this close would be to get real conservative on the funds that are available to spend.
As such the 1.0 million would need to be in a very safe portfolio mix which would not allow for much marginal growth over inflation.
My view with these parameters would be like this;

$780K = Need $60K for 13 years - age 54 to 67
$286K = Need $26K for 11 more years to pay off mortgage ($60K total less $44K SS)
$XXX = Need $1K more each year past mortgage payoff at age 78, $45K need less $44K SS

Totals run over 1.0 million so it is too tight for my thoughts.
smitcat,

Thanks. So, it looks like I need something more to make this work. For example, my wife needs to keep her 15K to 20K per year job.

KlangFool
I agree. With a budget as tight as yours, the $5,000 makes a significant difference. You would need an extra $125,000 in your portfolio to fund that $5,000 at a 4% withdrawal rate, for example.

FYI, we could live a comfortable life on about $35,000 a year, so your $25,000 doesn't seem out of line. The major concession we'd have to make is to cut out traveling. But the rest of our life would continue as is, and we are in a HCOL. Like you, this budget supposes a paid-off house and excludes healthcare.
delamer,

Thanks. That number = one more year for me. Or, if I am lucky, I may hit that number by the end of the yer.

KlangFool

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

Post by lazydavid » Tue Jun 13, 2017 12:09 pm

KlangFool wrote:new2bogle,

This is what I observed. People that save a lot (30% to 50% gross income) tend not to budget. People that save less tend to budget.

KlangFool
This is a good way of looking at it. Our take home pay is right around 40% of our gross, primarily due to a high savings rate (taxes and benefits are factors as well, of course). The only time we look closely at what we spend is when our primary checking account balance gets a little low for comfort. But as you point out, we don't budget because we don't feel the need. What we have is what we can spend. That amount stays the same every year, while the amount saved goes up every year because we "back out" our annual raises, and have always invested 100% of our equity compensation.

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

Post by ikowik » Tue Jun 13, 2017 3:30 pm

KlangFool wrote:
ikowik wrote:
spammagnet wrote:
KlangFool wrote:... I know I am. I do not know why others think that I am spending very little money.
I suspect many are not recognizing that you're not including housing in your expenses.

This is correct for me, I did not realize property taxes were included in housing expenses. Hasty reading of the thread on my part
ikowik,

My property tax is around $4,500 per year if it makes any difference.

KlangFool
Klangfool
This thread made me go back and check my expenses. I do track quarterly and average out over the year to get some idea what I can expect in retirement, and what expenses will go away.
Excluding all housing and medical expenses, our monthly spending for a family of three (young adult daughter, moving out and financially able to spend her own money this year :happy ) has been, on average, $1997/ month over the last 3 years. So that is just about same as yours!
BUT my housing expenses block includes property taxes, homeowner's insurance, yard and home maintenance and occasional lump-sums for appliance repairs and replacement. That has come to $1700/ month on average, but I have no mortgage. My property/ school taxes are high, around $12000/ year
Not to belabor the point, but have you accounted for all these, especially the unexpected appliance/ car replacement costs, in your budget? And I don't even want to talk about putting away money for long-term care or paying for insurance.

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

Post by KlangFool » Tue Jun 13, 2017 3:43 pm

ikowik wrote:
Klangfool
This thread made me go back and check my expenses. I do track quarterly and average out over the year to get some idea what I can expect in retirement, and what expenses will go away.
Excluding all housing and medical expenses, our monthly spending for a family of three (young adult daughter, moving out and financially able to spend her own money this year :happy ) has been, on average, $1997/ month over the last 3 years. So that is just about same as yours!
BUT my housing expenses block includes property taxes, homeowner's insurance, yard and home maintenance and occasional lump-sums for appliance repairs and replacement. That has come to $1700/ month on average, but I have no mortgage. My property/ school taxes are high, around $12000/ year
Not to belabor the point, but have you accounted for all these, especially the unexpected appliance/ car replacement costs, in your budget? And I don't even want to talk about putting away money for long-term care or paying for insurance.
ikowik,

<< That has come to $1700/ month on average,>>

This is about the same as my PITI: mortgage + homeowner insurance + property tax is around $1,700 to $1,800.

<< but have you accounted for all these, especially the unexpected appliance/ car replacement costs, in your budget?>>

I do not budget. I only have about 60K to spend per year after all the "Pay Yourself First" automated savings. So, we get it done within that amount of money. We cannot spend the money that we do not have.

KlangFool

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

Post by bayview » Tue Jun 13, 2017 7:10 pm

KlangFool wrote: delamer,

Thanks. That number = one more year for me. Or, if I am lucky, I may hit that number by the end of the yer.

KlangFool
KlangFool, I hope you get that year, or the market returns to make it happen sooner. It's an interesting world out there these days.

Best wishes to you and to your family. :beer
The continuous execution of a sound strategy gives you the benefit of the strategy. That's what it's all about. --Rick Ferri

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