Is it time for me to "call in rich"?

[TravelforFun]

OP, this is my back-of-the-envelope calculations.

I’m going to be conservative and say you need $95K a year or $110K before taxes.

If you retire now, follow these numbers:

Between 2018 and 2023 when your wife retires, you would need

($110K -$55K wife’s income) x 5 years = $275K

Between 2023 and 2030 after your wife retires and before your pension kicks in, you would need:

$110K x 7 years = $770K

Between 2030 and 2032, you get pension and before your SS kicks in, you would need:

($110 K- $10K) x 2 years = $200K

Between 2032 and 2036 you have your SS and before your wife’s SS kicks in, you would need

($110K - $10K - $30K) x 4 years = $280K

After 2036, you would need:

($100K - $10K - $30K - $24K) / 0.03 = $1.530 million

Total: $3.1 million

You’re cutting it close.

 
TravelforFun

[Capsu78]

"...You are fartin" through silk, Son..." said someone famous whose name I can't recall. You are at a fork in the road... you should take it.

[marcopolo]

OP, this is my back-of-the-envelope calculations.

I’m going to be conservative and say you need $95K a year or $110K before taxes.

If you retire now, follow these numbers:

Between 2018 and 2023 when your wife retires, you would need

($110K -$55K wife’s income) x 5 years = $275K

Between 2023 and 2030 after your wife retires and before your pension kicks in, you would need:

$110K x 7 years = $770K

Between 2030 and 2032, you get pension and before your SS kicks in, you would need:

($110 K- $10K) x 2 years = $200K

Between 2032 and 2036 you have your SS and before your wife’s SS kicks in, you would need

($110K - $10K - $30K) x 4 years = $280K

After 2036, you would need:

($100K - $10K - $30K - $24K) / 0.03 = $1.530 million

Total: $3.1 million

You’re cutting it close.

 
TravelforFun

I am all for being conservative. But, 0% real growth over the next 18 years? And then, at age 70, after enduring 18 years of 0% real growth, he needs to restrict himself to only a 3% withdrawal rate?

Also, I think you have a math error: ($100K - $10K - $30K - $24K) / 0.03 = $1.2M, not $1.53M. So even being this conservative, he needs ~2.8M, leaving him another ~15% cushion on top of the assumptions of his highest spending needs.

If that is cutting it close, not many here would be able to retire.

[nedsaid]

If you are going to retire be sure and de-risk your portfolio first. Get a retiree's asset allocation first before quitting the job. Wouldn't it be awful if the market dived right after you retired? Then trying to live off a depleted portfolio. What I am trying to say is work the numbers first and then do some soul searching. Do you want to retire or do you want a career shift? Another thing to think about is what you will do after retirement. You not only need something to retire from but you also need something to retire too. You might find yourself just bored out of your skull. So run the numbers and do some life planning first. Good luck and best wishes.

[TravelforFun]

Marcopolo,

Back of envelop math, hence the error. A portion of the OP’s portfolio should be invested conservatively just to keep up with inflation unless they want to face sequence of return risk, and 3% is to ensure the money would last them forever.

TravelforFun

[TallBoy29er]

Congrats, you have done amazing. I hope to be in your position some day.

[bb]

You’re cutting it close.

This analysis seems flawed. No gain for such a long period of time
and then saying a conservative withdrawal rate of 3% - which is
conservative for any age - let alone the age of OP in 2036 seems
to be conservative to the point of ridiculous.

[10YearPlan]

Financially speaking-yes! But I'd just do a tiny bit of soul-searching from the non-financial perspective first.

Is your wife planning to retire as well at the same time? If so, have you spent large chunks of time on weekdays together other than weekends/the occasional vacation? If not, would it be possible for you to take some time off together to experiment with what your days look like and see if that makes you (both) happy?

If you retire and she doesn't, how will that work?

[wolf359]

Financially, you're fine. If you're not sure what you're going to do with your time, then you should try some "practice retirements."

Take a long vacation or arrange a sabbatical. Mentally pretend that you're retired, and figure it out. Live on your retirement budget during that time. Make adjustments as required before you retire for real.

Cut back on hours, or start consulting. Use the period as being semi-retired where you have more free time to do other things and figure out what they are. The part-time work isn't for financial reasons, it's to allow you to hang onto your old structured life as you move into your new one.

Start living on your retirement budget and from your investments now. Save 100% of your current salary as just a temporary cash stream. Once you make this mental shift, you practice living on your new finances, and start thinking of your job in terminal mode. At this point, you open yourself up to what your life looks like outside the job bubble.

[familytruckster]

My only advice would be to pay someone else to build the man cave now and pay for it with your "overtime" income and then retire. As an engineering manager, you know new construction seldom comes in on budget.

[Ged]

Now we're at at $3.2 million!

But truth be told, I'm tired of this job.

Life is short.

What are you waiting for??????

[Chadnudj]

does your company know you have the finances to retire?

Does your company typically offer separation packages?

the other consideration is if you don't mind your job and you are salaried, unofficially cut back your hours until someone says something. what's the worst they can do to you?

but it is probably best to call it a career at this point and enjoy.

This is an underrated point. Play your cards right, and you could engineer your own severance -- Financial Samurai (financialsamurai.com) sells a book about this via his site. Might be worth the purchase/read time if it could help you get some extra money from your company, even if you'll be fine without it.

EDITED TO ADD: Plus, with a severance there is the opportunity to have company-paid healthcare for a time period (and/or COBRA either in addition to that or separate from that), which could save you a great deal for as long as it lasts in healthcare costs. I'd highly recommend looking into how to best engineer your own layoff/severance....

[wander]

Yes, you are rich and should stay home.

[Carefreeap]

We did it about the same age as you guys.

A couple of points;

We lived on our "retirement budget" the last three years of DH's work. We had re-located out of the country and since everything else changed it was easy for us to alter our budget.

We assumed that paying our healthcare costs in retirement would be the "new" mortgage. We weren't disappointed. It's been a bit unsettling with all the changes but we've managed o.k.

The comments about having something to do are spot-on. My husband was used to managing big projects and programs and has an EXTREMELY annoying habit of trying to tell me how to do things around the house. Things like how to load the dishwasher and clean the house, chores I've done since I was eight years old. This is NOT a helpful approach. You engineer types do well in your field because to keep track of things. Not helpful with the give and take in a relationship.

Find some outside activities. I had to push my husband to golf and have social experiences with the other guys his age. He's an only child and somewhat of an introvert. The problem was that he became so socially dependent on me and I needed my alone time too. Spending some time away from each other makes for a healthier relationship.

You're fine financially. Regardless of the advice you get hear you will find some personal challenges unique to your situation. You'll get through it!

[libralibra]

post removed

[marcopolo]

However, so you've worked your entire career to reach your highest earning potential just to chuck it all?

Maybe a project change, job change, or extended vacation would make things interesting enough again to add a few more 200k years to the savings pot.

To what end? Especially since he does not have legacy concerns.

His earnings might just keep increasing. What then? Just keep working forever because you are always at your highest?

I can certainly understand various points of view regarding what is "enough", and I tend to fall on the fairly conservative side. But, At some point there must be "enough", right?

[market timer]

Sounds like you are mostly retiring away from a 28-year-old boss and not to pursue anything in particular. I also tried an early retirement and was pretty bored after about six months. You say you could easily get another job in another part of the world. Personally, I would try that if I were you. Pick a new place to live for two years and relocate. After two years, maybe do the same thing again. A city is a bit like a machine. I believe it helps to understand how the machine works if you are part of its operation.

[RetiredMule]

bhsince87,

Congrats on your diligence in getting to your financial goals (and then some!)

IMO, Life is too short (even if you live to be 100+), enjoy life after 30+ years of hard work!
I'm definitely of the opinion that you're financially well set to do what you want to do now - all your time and energy for your hobbies!.


I (and DW) had much less than your #s for retirement/after tax (blame it on our two kids whom we put thro' college etc. ). Both of us were in engineering/management positions, could've easily continued to be employed for many more with our megacorp tech employer...work was very challenging but rewarding (financially as well), but, had my share of boredom from too many boring meetings, and the itch to do things I wanted to pursue as retirement hobbies (reading, travel etc.), not to mention the relatively minor health issues that started cropping up in late 40s for me. So, both of us retired 3 and a half years ago, mid- late 50s of age for DW and self.

Every one's retirement experience is different and unique due to their "environmental factors" as well as personal factors, so no generalizing; it'd not do justice to it.
The key thing to have is the resources (finances) and agreement with your spouse on the retirement idea
Even better if you've defined turfs, especially for couples who have been working for the most part of your life together

[Plymouth56]

Pretty good! But consider there's a 14 year old around here somewhere with $5,000,000 wondering if he's doing OK...

As another long time lurker here , this had me laughing out loud!!

[wrongfunds]

Pretty good! But consider there's a 14 year old around here somewhere with $5,000,000 wondering if he's doing OK...

As another long time lurker here , this had me laughing out loud!!

Assuming this was NOT posted as sarcasm, I must have missed this topic. Could you point me to it?

[kramer]

I retired early as an engineer (age 41) and I too was terrified about it. I really didn't know if I could follow through with giving notice and it was one of the hardest things I did in my whole life ... that was 11 years ago and I am still retired with no regrets.

One thing I did after I made a pretty firm decision about retiring was think on it for several months, while also making diligent preparations for leaving.

[bhsince87]

OP here. Thank you all for your advice, concerns, and shared experiences! I truly appreciate it, and will refer back here often over the next few months/years.

I have an annual review coming up, so that should be interesting as well.

To answer some questions that came up more than once:

I have been switching my asset allocation aggressively over the past couple years. I moved from 80/20 stock bond, to 60/40, which is where I think I want to be longer term. Been kinda painful, I must admit! I've been toying with the "bond tent" idea, and going 40/60 for the first few years. But retiring younger than normal makes me think 60/40 might be a better approach longer term. We can clamp down spending, or work again if needed.

I am pretty sure I can get some sort of severance package, especially if I sign a non-compete deal. A few years ago, the company offered a one year salary, one year's health insurance, and access to the company's healthcare until age 65. And that was to the general population. I've heard that some higher level folks and engineers got more pay for signing a non-compete. If I can get two years pay, it almost seems like a no brainer.

But this brings up a sticky situation. If I ask for and receive such a package, then part time employment with the current employer is probably off the table going forward. They have a pretty strict rule with that.

And conversely, if I ask for part time employment or contract/consulting work, then the severance package option goes away.

Also, since that last package, the company is no longer allowing retired employees to remain on the employer insurance plan. But I have heard rumors they are making exceptions for some employees.

Bottom line, after the responses here, I am feeling much more positive about our current situation!

[MP173]

I agree with the others...you are in a good place financially with healthcare being the only expense issue and even that should be manageable.

Only other concern I see is that you have $900k in individual stocks with $600k in cap gains. How diversified is that $900k? How many stocks? What is that amount throwing off in dividends. How "blue chip" are those stocks?

With your experience and your reputation, there is no doubt you should be able to secure other employment of consulting if necessary.

Good luck,

Ed

[bhsince87]

I agree with the others...you are in a good place financially with healthcare being the only expense issue and even that should be manageable.

Only other concern I see is that you have $900k in individual stocks with $600k in cap gains. How diversified is that $900k? How many stocks? What is that amount throwing off in dividends. How "blue chip" are those stocks?

With your experience and your reputation, there is no doubt you should be able to secure other employment of consulting if necessary.

Good luck,

Ed

The individual stocks are highly weighted to tech. It's what I know, and I have worked with almost all of these companies. I own about 35 at this point. Most are small cap, but there are a few that have become "blue chips", such as Microsoft, Intel, Cisco, Apple, etc.

I've averaged about 16% returns per year since the 1990's, so no complaints! But I haven't bought any more for a few years.

I've been waiting to sell them until we're in the 0% cap gain tax range.

That being said, they do provide unexpected surges in income that can make tax planning a headache. Every other year or so, one gets bought out, and I get an unwanted cap gain hit. SO I do want to move away from them over time.

[malabargold]

Don’t count your chickens quite yet.
The markets have been booming
Close to a decade
Figure in a pull back of 30%

[Bastiat]

The only catch I see is that depending on what kind of home improvements you want to do along with the free-standing workshop, $100k likely wont be enough. I'd talk to a contractor (or five) and tell them what exactly you want to do and find out how much that'll cost. You'll likely be surprised. Better to find that out now while you still have earned income than feel limited later when you don't.