Can I retire at 49

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Topic Author
ALinLI
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Can I retire at 49

Post by ALinLI »

Am thinking about retiring after 28 year career in IT after many years of saving with goal of retiring early due to demanding career.
Am 49 years old. Married. DW is 49 also 2 kids ages 16 and 14
DW is retired now from being a physician. Has small side tutoring job at $10k income per year.

Assets include:
$550k home paid off with no mortgage (HCOL).
$800k in combined retirement accounts (401k and IRA)
$700k Taxable account
$120k 529 accounts for kids

Accounts are all in Vanguard 3 fund portfolio at 65/35 allocation.

No debt aside from mortgage

Projecting expenses to be about $100k year including (health insurance, taxes). But assuming withdrawal will be 90k per year as $10k in income from DW.
Plan is for assets to bridge us at least 20 years until 70 where our SS and small pension should provide enough income to cover expenses
Total His and her SS + Pension @ 70 estimate to be $88,000/yr.
Am targeting a 6% SWR from portfolio of $1.5 million (not counting 529 or home).
Am I missing something ? Are there any flaws in our plan?
Grt2bOutdoors
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Re: Can I retire at 49

Post by Grt2bOutdoors »

A SWR of 3% is recommended for someone who is 50, you are projecting a rate that is double that. What is your premise that 6 percent is doable? You project a Social Security benefit- how? The benefit is calculated on the last 35 years, you retire now, you will have 17 years of zero. Did you run your projection from SSA.Gov?

I don’t think your plan is viable. You may want to revisit this plan in say 6-7 years.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
SS Rambo
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Re: Can I retire at 49

Post by SS Rambo »

I don't see much margin for error or road bumps between now and 70 with this plan.

Your expenses are $100k after taxes, and your $90+$10 plan is before taxes. I would suggest re-running your numbers with a tax hit off the top of your SWR (and I would project higher tax rates than we have today). You think you are projecting an SWR of 6% but really to account for the tax hit you're describing a situation with an SWR of ~7.5%. Also, as mentioned, your SWR should be closer to 3%. So basically you need more than $3M for this plan to start looking possible, not $1.5M.

The fact that your pension + SS projection total less than expenses is worrisome, especially since $100K in expenses in today's dollars will be a lot more in 20 years. Yes your expenses will go down once the kids are out, but on average medical costs in 60s and 70s will cost more than feeding a couple teens. I think you're a million+ short of being in a position where someone could ever endorse the idea of early retirement, but the great thing is you don't have to listen to us!
Last edited by SS Rambo on Sun Nov 08, 2020 8:15 pm, edited 1 time in total.
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retired@50
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Re: Can I retire at 49

Post by retired@50 »

ALinLI wrote: Sun Nov 08, 2020 7:56 pm
Am targeting a 6% SWR from portfolio of $1.5 million
Am I missing something ? Are there any flaws in our plan?
I don't think a 6% withdrawal rate is safe. If you have a bad sequence of returns in the first decade of retirement, you could wind up looking for a job or being forced to cut way back on expenses.

See this thread: viewtopic.php?f=10&t=315102

Regards,
This is one person's opinion. Nothing more.
SteelCityMD
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Re: Can I retire at 49

Post by SteelCityMD »

As other have said the ratio is not great. Saving seem low for IT+physician at 50 given 6 figure spending.

It’s probably doable but like 20% chance of failure. Sequence of returns will matter a lot.

That said, 16 and 14 is a good time do some maneuvering if you intend to cheese the EFC. Paid off home and 700k taxable aren’t helping you there. Start planning now.
SnowBog
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Re: Can I retire at 49

Post by SnowBog »

ALinLI wrote: Sun Nov 08, 2020 7:56 pm Am targeting a 6% SWR from portfolio of $1.5 million
What's the timeline?

As others have noted, 6% WR seems rather high, especially at 49, when the general guidance for that early is closer to 3 - 3.5% (well below 4%, which isn't as safe for early retirement).

However, if I followed your post, it sounds like after 70, when you're pensions/SS kick, you won't need to withdraw much to cover the gap...

So while the 6% WR might seem high, if that's only for the next 20 years (delayed SS/Pensions), and then drops to something less like 2% - that might be a completely different picture...
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luminous
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Re: Can I retire at 49

Post by luminous »

It feels risky to plan on using up all your assets before 70 and only rely on SS and pension.

Things to think about:
  • Cost of college for your kids: will the 529 savings be enough?
  • Long term care for you two or any parents or siblings.
  • Large one time expenses like cars, medical events, home repairs.
50/20/30 US stock/international stock/bonds. Hope to semi-retire in 2022.
SnowBog
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Re: Can I retire at 49

Post by SnowBog »

Regardless, I'm not sure the numbers work...

Similar expenses to you, married only one child (slightly younger than yours), a little younger than you, but we have more saved - and plan on saving even more before pulling the cord...

Have you tried something like FireCalc? What were the results?
goblue100
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Re: Can I retire at 49

Post by goblue100 »

Grt2bOutdoors wrote: Sun Nov 08, 2020 8:04 pm You project a Social Security benefit- how? The benefit is calculated on the last 35 years, you retire now, you will have 17 years of zero. Did you run your projection from SSA.Gov?

I don’t think your plan is viable. You may want to revisit this plan in say 6-7 years.
I don't think it is the last 35 years, it is the highest earning 35 years. I know when I looked at mine, 5 years of zero didn't hurt that bad. If he started work at 18 he could have 31 or 32 years of earnings.
Financial planners are savers. They want us to be 95 percent confident we can finance a 30-year retirement even though there is an 82 percent probability of being dead by then. - Scott Burns
Topic Author
ALinLI
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Re: Can I retire at 49

Post by ALinLI »

Hi Grt2bOutdoors -
Yes the SS estimates are from SSA.GOV website estimator putting in zero for average future annual salary for both me and DW and NOT assuming same salary going forward. It is projecting based on our existing years of service $40k/yr benefit for me $28k/yr for DW + my $18k/yr pension if i delay that one to 70 so without working another day we have earned $86k starting at 70. Moreover the SSA website does not reflect my 2020 earnings so my time horizon is 20 years vs. 30 to 40 years timeframe.

As per https://www.bogleheads.org/wiki/Safe_withdrawal_rates a 6% withdrawal has 75% success rate for 50/50 asset allocation portfolio.

Trinity table 3
https://www.bogleheads.org/w/images/d/d ... Table3.jpg
Topic Author
ALinLI
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Re: Can I retire at 49

Post by ALinLI »

Hi SteelCityMD ,

thanks for the feedback. What is EFC?
Topic Author
ALinLI
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Re: Can I retire at 49

Post by ALinLI »

Will check Firecalc also. Also in future we might consider moving to cheaper LCOL and downsizing - our $550k is paid off and not included
Topic Author
ALinLI
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Re: Can I retire at 49

Post by ALinLI »

Hi SS Rambo ,

SS is COLA adjusted so the benefit should increase somewhat with inflation. Also our medical expenses should decrease at 65 with Medicare instead of paying for ACA. The current $100k is high because we already included ACA medical costs and Taxes on earnings.
Topic Author
ALinLI
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Re: Can I retire at 49

Post by ALinLI »

Hi Luminous,
It feels risky to plan on using up all your assets before 70 and only rely on SS and pension.

Things to think about:
Cost of college for your kids: will the 529 savings be enough?
Long term care for you two or any parents or siblings.
Large one time expenses like cars, medical events, home repairs.
We do not plan to fund any college costs over our 529 savings. The kids will need to take a loan or choose a cheaper school.
We have 2 paid off cars that are 3 years old that should last a while.
MathIsMyWayr
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Re: Can I retire at 49

Post by MathIsMyWayr »

ALinLI wrote: Sun Nov 08, 2020 8:39 pm Hi Grt2bOutdoors -
Yes the SS estimates are from SSA.GOV website estimator putting in zero for average future annual salary for both me and DW and NOT assuming same salary going forward. It is projecting based on our existing years of service $40k/yr benefit for me $28k/yr for DW + my $18k/yr pension if i delay that one to 70 so without working another day we have earned $86k starting at 70. Moreover the SSA website does not reflect my 2020 earnings so my time horizon is 20 years vs. 30 to 40 years timeframe.
Are you claiming that you will get $58k/yr ($40k+$18k) by delaying to 70? The maximum social security benefit is $46,740/yr ($3,895/mon) for someone who files at age 70 in 2021. I was told that the exact figure may vary a little bit.
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cockersx3
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Re: Can I retire at 49

Post by cockersx3 »

SnowBog wrote: Sun Nov 08, 2020 8:19 pm
ALinLI wrote: Sun Nov 08, 2020 7:56 pm Am targeting a 6% SWR from portfolio of $1.5 million
What's the timeline?

As others have noted, 6% WR seems rather high, especially at 49, when the general guidance for that early is closer to 3 - 3.5% (well below 4%, which isn't as safe for early retirement).

However, if I followed your post, it sounds like after 70, when you're pensions/SS kick, you won't need to withdraw much to cover the gap...

So while the 6% WR might seem high, if that's only for the next 20 years (delayed SS/Pensions), and then drops to something less like 2% - that might be a completely different picture...
That was my first thought as well. However, after running it through cFireSim it still won't work - success rate appears to be around 70%. Even though the portfolio doesn't need to last as long, it appears that at 6% WR a bad initial sequence of returns drains things too fast.
finite_difference
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Re: Can I retire at 49

Post by finite_difference »

I’d personally continue to work until the pandemic is over. Retiring at 50/51 ain’t bad.
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Adfmacro
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Re: Can I retire at 49

Post by Adfmacro »

If your retirement account and IRAs are traditional, in order to avoid penalty you would have to prepare to do “substantial equal” withdraws if you are planning on withdraws before 59 1/2 age. If you just use your taxable account first, it could go to zero before you get to 59.

Even if you use the retirement money without penalty, there is a good chance that most of the 1.5 million will be gone by age 70.

The only way the numbers work is for you to have an aggressive AA and there are no downturns in the market.

If you get a return that is 4% above inflation and use the full 1.5 million it only gets you to 80 since the pension and SS have started. Then if one of you dies, where will that leave you?

Retirement now seems pretty risky. Everything would have to work out as planned and we know that rarely happens.

Run the numbers with one of you dying in 5 yrs, 10 years, etc. and the other living to 105 and keep in mind taxes for singles. Perhaps life insurance is the answer for the next 20 years, but that may not work out for the following 20 years.
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Watty
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Re: Can I retire at 49

Post by Watty »

ALinLI wrote: Sun Nov 08, 2020 7:56 pm Plan is for assets to bridge us at least 20 years until 70 where our SS and small pension should provide enough income to cover expenses
If the pension is not adjusted for inflation it may be worth very little when you are 70 much less 90.

You also need to figure out your finances if one of you dies and you then only have one Social Security check.

I don't know how much the pension is but that may not be realistic.
ALinLI wrote: Sun Nov 08, 2020 7:56 pm Projecting expenses to be about $100k year including (health insurance, taxes).
Retiring when you still have two kids to support and pay health insurance for makes getting your retirement numbers to work a lot harder.

Your expenses will change a lot as the kids get through college so you really need to look at what your expenses will be during different phases since they will likely be a lot lower once your kids are both out on their own.
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ALinLI
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Re: Can I retire at 49

Post by ALinLI »

Hi MathIsMyWayr,

I am on the SSA.GOV site for my account , here is what is says for me. At my current salary about $180k/year if I continue to work and delay to 70
my maximum benefit is $3959/month or $47,508/yr

When I enter my future earnings as zero. My benefit gets reduced to $3377/month or $40,524. See extract from SSA below:

Retirement Age Date Benefit Amount
Age 70 (Delayed) December 2041 Custom
Retirement Benefit
($0 Estimated
Annual Earnings)
$3377.00 / month
Age 70 (Delayed) December 2041 Delayed
Retirement Age
(Maximum
Benefit)
$3959.00 / month
Grt2bOutdoors
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Re: Can I retire at 49

Post by Grt2bOutdoors »

MathIsMyWayr wrote: Sun Nov 08, 2020 8:54 pm
ALinLI wrote: Sun Nov 08, 2020 8:39 pm Hi Grt2bOutdoors -
Yes the SS estimates are from SSA.GOV website estimator putting in zero for average future annual salary for both me and DW and NOT assuming same salary going forward. It is projecting based on our existing years of service $40k/yr benefit for me $28k/yr for DW + my $18k/yr pension if i delay that one to 70 so without working another day we have earned $86k starting at 70. Moreover the SSA website does not reflect my 2020 earnings so my time horizon is 20 years vs. 30 to 40 years timeframe.
Are you claiming that you will get $58k/yr ($40k+$18k) by delaying to 70? The maximum social security benefit is $46,740/yr ($3,895/mon) for someone who files at age 70 in 2021. I was told that the exact figure may vary a little bit.
He says he is going to get 68k (him 40k and wife 28k from Social Security) plus his 18k work Pension. What he’s not accounting for is a potential 25 percent haircut in Social Security benefits as prominently displayed by SSA.gov per the Trustees annual report. I think their are too many holes in this plan for early retirement to work. If the wife goes back to work and earns more money then maybe it’s doable in 5-6 years.

The thought that the kids can pay for college via loans really doesn’t work. OP - the max borrowing from student is $5,500 per year with Stafford. After that, it will be parent co-signed loans. With $700k in taxable account value - those assets are fair game on the FAFSA Expected Family Contribution. In addition to 529 plan savings. Suggest you go visit some target schools websites and search for Net Price Calculator. Type in your stats and prepare to fall off your chair.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
MathIsMyWayr
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Re: Can I retire at 49

Post by MathIsMyWayr »

Grt2bOutdoors wrote: Sun Nov 08, 2020 9:11 pm
MathIsMyWayr wrote: Sun Nov 08, 2020 8:54 pm
ALinLI wrote: Sun Nov 08, 2020 8:39 pm Hi Grt2bOutdoors -
Yes the SS estimates are from SSA.GOV website estimator putting in zero for average future annual salary for both me and DW and NOT assuming same salary going forward. It is projecting based on our existing years of service $40k/yr benefit for me $28k/yr for DW + my $18k/yr pension if i delay that one to 70 so without working another day we have earned $86k starting at 70. Moreover the SSA website does not reflect my 2020 earnings so my time horizon is 20 years vs. 30 to 40 years timeframe.
Are you claiming that you will get $58k/yr ($40k+$18k) by delaying to 70? The maximum social security benefit is $46,740/yr ($3,895/mon) for someone who files at age 70 in 2021. I was told that the exact figure may vary a little bit.
He says he is going to get 68k (him 40k and wife 28k from Social Security) plus his 18k work Pension. What he’s not accounting for is a potential 25 percent haircut in Social Security benefits as prominently displayed by SSA.gov per the Trustees annual report. I think their are too many holes in this plan for early retirement to work. If the wife goes back to work and earns more money then maybe it’s doable in 5-6 years.

The thought that the kids can pay for college via loans really doesn’t work. OP - the max borrowing from student is $5,500 per year with Stafford. After that, it will be parent co-signed loans. With $700k in taxable account value - those assets are fair game on the FAFSA Expected Family Contribution. In addition to 529 plan savings. Suggest you go visit some target schools websites and search for Net Price Calculator. Type in your stats and prepare to fall off your chair.
Sorry for being careless.
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ALinLI
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Re: Can I retire at 49

Post by ALinLI »

Hi Grt2bOutdoors ,

Thanks again to you and all the other posters for their feedback. Really value the advise on this great forum , Btw can you please share a link where I can find this information from SSA on the 25% potential haircut.
stoptothink
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Re: Can I retire at 49

Post by stoptothink »

Grt2bOutdoors wrote: Sun Nov 08, 2020 9:11 pm
MathIsMyWayr wrote: Sun Nov 08, 2020 8:54 pm
ALinLI wrote: Sun Nov 08, 2020 8:39 pm Hi Grt2bOutdoors -
Yes the SS estimates are from SSA.GOV website estimator putting in zero for average future annual salary for both me and DW and NOT assuming same salary going forward. It is projecting based on our existing years of service $40k/yr benefit for me $28k/yr for DW + my $18k/yr pension if i delay that one to 70 so without working another day we have earned $86k starting at 70. Moreover the SSA website does not reflect my 2020 earnings so my time horizon is 20 years vs. 30 to 40 years timeframe.
Are you claiming that you will get $58k/yr ($40k+$18k) by delaying to 70? The maximum social security benefit is $46,740/yr ($3,895/mon) for someone who files at age 70 in 2021. I was told that the exact figure may vary a little bit.
He says he is going to get 68k (him 40k and wife 28k from Social Security) plus his 18k work Pension. What he’s not accounting for is a potential 25 percent haircut in Social Security benefits as prominently displayed by SSA.gov per the Trustees annual report. I think their are too many holes in this plan for early retirement to work. If the wife goes back to work and earns more money then maybe it’s doable in 5-6 years.

The thought that the kids can pay for college via loans really doesn’t work. OP - the max borrowing from student is $5,500 per year with Stafford. After that, it will be parent co-signed loans. With $700k in taxable account value - those assets are fair game on the FAFSA Expected Family Contribution. In addition to 529 plan savings. Suggest you go visit some target schools websites and search for Net Price Calculator. Type in your stats and prepare to fall off your chair.
Depends on where OP lives. Definitely possible to pay for college completely with student loans or a part-time job in my area.
Random Poster
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Re: Can I retire at 49

Post by Random Poster »

Respectfully, any retirement at 49 based on a 6% withdrawal rate will likely only be a temporary one.
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luminous
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Re: Can I retire at 49

Post by luminous »

ALinLI wrote: Sun Nov 08, 2020 9:16 pm Hi Grt2bOutdoors ,

Thanks again to you and all the other posters for their feedback. Really value the advise on this great forum , Btw can you please share a link where I can find this information from SSA on the 25% potential haircut.
My most recent social security statement says:
"* Your estimated benefits are based on current law. Congress has made changes to the law in the past and
can do so at any time. The law governing benefit amounts may change because, by 2035, the payroll taxes
collected will be enough to pay only about 80 percent of scheduled benefits."
50/20/30 US stock/international stock/bonds. Hope to semi-retire in 2022.
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2pedals
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Re: Can I retire at 49

Post by 2pedals »

I would wait until your 16 year old kid has at least graduated from college. I think you will find that you and wife will want to pay more toward your kids college education than 60k per kid or 15k per year for a 4 year program, if they have strong aspirations.
Topic Author
ALinLI
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Re: Can I retire at 49

Post by ALinLI »

So just wanted some feedback what percentage of SS benefits are boogleheads expecting to collect ?
SteelCityMD
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Re: Can I retire at 49

Post by SteelCityMD »

ALinLI wrote: Sun Nov 08, 2020 8:42 pm Hi SteelCityMD ,

thanks for the feedback. What is EFC?
Expected family contribution.

You’ve done a great job saving in the 529 plans but the fact that you don’t understand the term like EFC means you are grossly under planning for their financial aid packages. One thing that is important to note is that your personal assets may actually prevent your children from getting financial aid, colleges offer two types of aid - Merit and need based. You need to understand how your current level of assets will impact your children’s ability to qualify for financial aid. Some of the best schools in our country have the best financial aid packages so sticker price doesn’t always mean a lot. If your income is literally going to be zero you have a good chance of taking advantage of a very low EFC in a very high financial aid package
alshayed
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Re: Can I retire at 49

Post by alshayed »

ALinLI wrote: Sun Nov 08, 2020 9:53 pm So just wanted some feedback what percentage of SS benefits are boogleheads expecting to collect ?
Last time I looked they (Social Security) were projecting that there will only be enough incoming taxes to pay about 75% of scheduled benefits unless Congress and the president do something to fix it. Fixing it could be increasing taxes, lowering benefits, or something in-between.
stan1
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Re: Can I retire at 49

Post by stan1 »

Have you considered an IT side gig/consulting or even permanent telework situation that would bring in some money but let you have more control over hours worked per week, time off, and who your clients/boss/co-workers are? There's steps between not working and the full on rat race. Would help out a lot in the situation you are describing (especially if the job had health insurance).
Last edited by stan1 on Sun Nov 08, 2020 10:09 pm, edited 1 time in total.
alshayed
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Re: Can I retire at 49

Post by alshayed »

Just eyeballing your plans and ignoring the Social Security and college expense concerns I'm pretty sure that you need to put in at least an extra 5 years to make this work. That estimate on your expenses is a hefty load on your savings. Even 5 extra years might be tight.
KlangFool
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Re: Can I retire at 49

Post by KlangFool »

OP,


No. It could only work if your annual expense is (1.5 million / 30 =) 50K or lower per year. At the 90K to 100K range, you will pay a lot of taxes plus no ACA subsidy.


KlangFool
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2pedals
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Re: Can I retire at 49

Post by 2pedals »

ALinLI wrote: Sun Nov 08, 2020 9:53 pm So just wanted some feedback what percentage of SS benefits are boogleheads expecting to collect ?
I think the closer you are to collecting SS benefits the better your chances to collecting a higher percentage of SS benefits. For example the 2016 social security law killed the file and suspend strategy that many folks older than me got benefits that I will never get.
KlangFool
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Re: Can I retire at 49

Post by KlangFool »

OP,

Please verify your current annual expense number. I believe that it is a lot more than 100K per year.


KlangFool
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ALinLI
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Re: Can I retire at 49

Post by ALinLI »

OP,

Please verify your current annual expense number. I believe that it is a lot more than 100K per year.


KlangFool
Hi KlangFool, thanks for your time and feedback - our current expenses are actually about $95k year. The reason I increased the budget is planning for paying taxes. Regarding ACA, am assuming that initially will draw out of my taxable accounts where I have all equities so there are long term capital gains here but assuming I withdraw 70k from here + 10k dividends and my cost basis is 35k. My LTCG is 35k + 10K dividends +10k salary = 55k Gross income for taxation should be lot lower than the 100k so my ACA subsidy should be substantial. You agree?
KlangFool
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Re: Can I retire at 49

Post by KlangFool »

ALinLI wrote: Sun Nov 08, 2020 10:33 pm
OP,

Please verify your current annual expense number. I believe that it is a lot more than 100K per year.


KlangFool
Hi KlangFool, thanks for your time and feedback - our current expenses are actually about $95k year.
ALinLI,


There might some special circumstances. But, the annual expense of 95K per year is not consistent with your current portfolio size of 1.5 million. Your gross income is 180K per year. Your spouse's income could be the same or a lot higher before his retirement.


You might be right about your annual expense. But, the numbers (gross income, annual expense, portfolio size) do not make sense.


KlangFool
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ALinLI
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Re: Can I retire at 49

Post by ALinLI »

Hi Klangfool,
But, the numbers (gross income, annual expense, portfolio size) do not make sense.
Just curious what is not making sense. Are you suggesting we have not saved sufficiently based on our incomes ?

I think considering we have also saved $120k in a 529 and have paid off a mortgage early with savings on a $550k house we have saved aggressively and

lived well under our means in a HCOL town.
KlangFool
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Re: Can I retire at 49

Post by KlangFool »

ALinLI wrote: Sun Nov 08, 2020 10:49 pm Hi Klangfool,
But, the numbers (gross income, annual expense, portfolio size) do not make sense.
Just curious what is not making sense. Are you suggesting we have not saved sufficiently based on our incomes ?

I think considering we have also saved $120k in a 529 and have paid off a mortgage early with savings on a $550k house we have saved aggressively and

lived well under our means in a HCOL town.
ALinLI,


1) What is your household income before your spouse retired?


2) What is your annual savings?


3) Your total net worth is about 2 million.


4) Let's assume that you and your spouse worked for about 25 years. It means that you save at most about 80K per year.


KlangFool

P.S.: This is water under the bridge aka the past is gone. I am just asking to reverify your current annual expense.
marcopolo
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Re: Can I retire at 49

Post by marcopolo »

ALinLI wrote: Sun Nov 08, 2020 7:56 pm Am thinking about retiring after 28 year career in IT after many years of saving with goal of retiring early due to demanding career.
Am 49 years old. Married. DW is 49 also 2 kids ages 16 and 14
DW is retired now from being a physician. Has small side tutoring job at $10k income per year.

Assets include:
$550k home paid off with no mortgage (HCOL).
$800k in combined retirement accounts (401k and IRA)
$700k Taxable account
$120k 529 accounts for kids

Accounts are all in Vanguard 3 fund portfolio at 65/35 allocation.

No debt aside from mortgage

Projecting expenses to be about $100k year including (health insurance, taxes). But assuming withdrawal will be 90k per year as $10k in income from DW.
Plan is for assets to bridge us at least 20 years until 70 where our SS and small pension should provide enough income to cover expenses
Total His and her SS + Pension @ 70 estimate to be $88,000/yr.
Am targeting a 6% SWR from portfolio of $1.5 million (not counting 529 or home).
Am I missing something ? Are there any flaws in our plan?
This forum gets a lot of similar questions about the feasibility of retiring early. In general, i believe the consensus opinion, if there is any such thing, tends to be too conservative. Also, no matter how financially secure one's situation is, there are always some here that will still raise some issue that i think often border on fear mongering. Having retired at the age of 51, I tend to take a more permissive view of these questions personally because i worry more about running out of time than i do running out of money.

Having said all that, I think your current plan is quite risky. If you or your DW are willing and able to go back to work if necessary (poor sequence early part of retirement), then it might be OK. But, I think you are leaving yourself very little margin for error.
Once in a while you get shown the light, in the strangest of places if you look at it right.
marcopolo
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Re: Can I retire at 49

Post by marcopolo »

Grt2bOutdoors wrote: Sun Nov 08, 2020 8:04 pm A SWR of 3% is recommended for someone who is 50, you are projecting a rate that is double that. What is your premise that 6 percent is doable? You project a Social Security benefit- how? The benefit is calculated on the last 35 years, you retire now, you will have 17 years of zero. Did you run your projection from SSA.Gov?

I don’t think your plan is viable. You may want to revisit this plan in say 6-7 years.
SWR studies are based on 30 year time span. OP only needs to withdraw for 20 years.
I agree that 6% is probably too high, but IMO there is no need for OP to go down to 3%
Once in a while you get shown the light, in the strangest of places if you look at it right.
marcopolo
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Re: Can I retire at 49

Post by marcopolo »

Adfmacro wrote: Sun Nov 08, 2020 9:03 pm If your retirement account and IRAs are traditional, in order to avoid penalty you would have to prepare to do “substantial equal” withdraws if you are planning on withdraws before 59 1/2 age. If you just use your taxable account first, it could go to zero before you get to 59.

Even if you use the retirement money without penalty, there is a good chance that most of the 1.5 million will be gone by age 70.

The only way the numbers work is for you to have an aggressive AA and there are no downturns in the market.

If you get a return that is 4% above inflation and use the full 1.5 million it only gets you to 80 since the pension and SS have started. Then if one of you dies, where will that leave you?

Retirement now seems pretty risky. Everything would have to work out as planned and we know that rarely happens.

Run the numbers with one of you dying in 5 yrs, 10 years, etc. and the other living to 105 and keep in mind taxes for singles. Perhaps life insurance is the answer for the next 20 years, but that may not work out for the following 20 years.
Roth Conversion ladder is a better alternative to substantially equivalent plans.
Once in a while you get shown the light, in the strangest of places if you look at it right.
marcopolo
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Re: Can I retire at 49

Post by marcopolo »

Random Poster wrote: Sun Nov 08, 2020 9:27 pm Respectfully, any retirement at 49 based on a 6% withdrawal rate will likely only be a temporary one.
What if you have a large pension at 55?
The WR should be evaluated in context of duration of retirement.
Once in a while you get shown the light, in the strangest of places if you look at it right.
marcopolo
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Re: Can I retire at 49

Post by marcopolo »

KlangFool wrote: Sun Nov 08, 2020 10:11 pm OP,


No. It could only work if your annual expense is (1.5 million / 30 =) 50K or lower per year. At the 90K to 100K range, you will pay a lot of taxes plus no ACA subsidy.


KlangFool
Why does OP need 30x, if he only needs to withdraw from his portfolio for 20 years?

It is quite easy to have $100k of spending and qualify for ACA tax credits, especially for a family of 4. Ask me how I know.
We would have to go out of our way to NOT qualify for such tax credits.
Once in a while you get shown the light, in the strangest of places if you look at it right.
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wander
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Re: Can I retire at 49

Post by wander »

Op, keep up the good work and re-assess same time next year.
CFM300
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Re: Can I retire at 49

Post by CFM300 »

ALinLI wrote: Sun Nov 08, 2020 7:56 pm $550k home paid off with no mortgage (HCOL).
...
No debt aside from mortgage
These statements confuse me. Do you have a mortgage or not? Also, anywhere you can buy a house for a family of four at $550k is not HCOL.
NightFall
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Re: Can I retire at 49

Post by NightFall »

ALinLI wrote: Sun Nov 08, 2020 8:39 pm Hi Grt2bOutdoors -
Yes the SS estimates are from SSA.GOV website estimator putting in zero for average future annual salary for both me and DW and NOT assuming same salary going forward. It is projecting based on our existing years of service $40k/yr benefit for me $28k/yr for DW + my $18k/yr pension if i delay that one to 70 so without working another day we have earned $86k starting at 70. Moreover the SSA website does not reflect my 2020 earnings so my time horizon is 20 years vs. 30 to 40 years timeframe.

As per https://www.bogleheads.org/wiki/Safe_withdrawal_rates a 6% withdrawal has 75% success rate for 50/50 asset allocation portfolio.

Trinity table 3
https://www.bogleheads.org/w/images/d/d ... Table3.jpg
While i do think this board can be extremely conservative at times when predicting financials into the future, the table you quote indicates that there is a 75% chance of success. That means things are likely to be okay. But I would think about the 25% chance that things are not okay. What happens then? Do you try to do a reverse mortgage? Sell your house? 25% isn’t a trivial chance. Not all of the failures will happen in your late 60’s either. It will be unlikely that either of you could return to your prior careers when such failures occur. Do you have the ability to cut back on the $100K of spending? Your budget needs to include infrequent but expensive big ticket items like new cars or a new roof as well.

If you have a good contingency plan for the 25% case, then you can feel more comfortable about going down this route. Personally, I would want $2M at this age to try this. That’s essentially asking your portfolio to take care of inflation increases in that case. You can see from the tables that you quote, that even this isn’t always a guaranteed outcome.
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Re: Can I retire at 49

Post by Grt2bOutdoors »

CFM300 wrote: Sun Nov 08, 2020 11:55 pm
ALinLI wrote: Sun Nov 08, 2020 7:56 pm $550k home paid off with no mortgage (HCOL).
...
No debt aside from mortgage
These statements confuse me. Do you have a mortgage or not? Also, anywhere you can buy a house for a family of four at $550k is not HCOL.
It is if your property taxes are $12-25k in Long Island, New York. The OP may also have a comfortable “high” lifestyle.
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Wanderingwheelz
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Re: Can I retire at 49

Post by Wanderingwheelz »

I’m 49 with assets that are double yours, expenses that are a fraction of yours, and only one already fully paid up college educated kid.

No way I’d even consider what you’re thinking of doing.
Jack FFR1846
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Re: Can I retire at 49

Post by Jack FFR1846 »

Sorry, no, you're not even close.

The house: Your mortgage is paid off and that's really good. But you still have to pay high property taxes. Do you plan to move to a low cost area, sell the house and rent going forward? If not, the equity in your house is meaningless.

The 529: That's great. Have you looked at colleges and costs? If you haven't, the first thing you need to know is that if you do get aid, it likely will NOT be in the form of grants. It'll be loans. Of course, Staffords ($5500 first year) is all you'll get from the federal government. The college might offer loans, but if you're not working, you might not qualify. Same for student private loans. They'll require parent co-signing, which means they're your loans. Same with federal PLUS parent loans. They're yours. $120k for 2 kids won't go far. It will pay for community college for 2 years for both of them. It would (in my state, MA) barely pay for one kid to go to state college for 4 years.

The long and short of it is that if you want to just retire and stay put, both you and your wife should work full time for 10 more years. DW needs to become a doctor again and bring in actual money.
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