Hit my "number" (I think)...now what?

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Normchad
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Re: Hit my "number" (I think)...now what?

Post by Normchad »

Kenkat wrote: Wed Jun 16, 2021 6:14 pm
jjunk wrote: Wed Jun 16, 2021 1:52 pm
Kenkat wrote: Wed Jun 16, 2021 1:40 pm Now that you’ve hit your number, the next step is to agonize about what to do about it. I am in similar circumstances and it’s a daily ritual - at least on work days :wink:
LOL definitely. I think my company's direction on WFH will play a large part in how 'swayed' I am towards one side or the other. Congrats on hitting your number btw.
I will add that part of my issue is that I hit my number a little earlier than I was planning and so now my question becomes whether or not a couple of extra years of withdraws will matter. My conclusion is they will not, but it still leaves a little nagging doubt. More money is always better than less. What if I retire and my portfolio drops 20%? I’d be ok, but not as ok if it didn’t or if I had even more.

In addition to that, I had an idea of what age I would probably retire at and that’s still 18+ months out as well - and I’m not 100% on that either. I did pick a date and start a countdown clock at the advice of a now retired co-worker, but that date is only known to me. I think I started somewhere above 1150 days and now am below 600. He (my co-worker) said it would go fast and he’s been right.

At this point, I tell people I am either retiring in 5 years or tomorrow - it just depends on the day. Like you, a lot really does depend on how things go. Will I realize the commute just isn’t worth it anymore when I return to the office? How will I feel about it if it’s just 2-3 days a week? How about getting on a plane and traveling again for work? Not something I do a lot (2-3x year) but it’s tiring at my age - but also I have to admit it breaks up the routine and there is a bit of it I do look forward to as well. Will the job go smoothly or will something happen to make it a living h....well, you get what I mean.

The nice thing is I feel I have options and I am pretty much in control of my own fate work-wise. That’s a really great feeling.
Same boat. I reached the number earlier than anticipated.

So here is something else to agonize over. By walking away “early”, I’m leaving money on the table. But it’s not money that I need.

But that is money that I could use to help aging parents, or spend on kids weddings, or contribute to charity. So am I being selfish by walking away? I don’t think I am. But maybe there will come a day when I wish I had an extra $100K to help out a family member? I may not ever need that. But leaving now means I will never be able to do it, even if I wanted too.
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jjunk
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Re: Hit my "number" (I think)...now what?

Post by jjunk »

jump4joy wrote: Wed Jun 16, 2021 4:57 pm Congratulations! This is so awesome and inspiring. I can't really contribute to the #s aspect, but I had some thoughts/rhetorical questions that hopefully help as you reflect on this situation.

Is there an option to drop down to part-time for what you do? That way you can buy some time, but hopefully allow yourself some rest and recovery.
If you left your job and took a break, could you come back and work part-time if you needed to? Would that be an option? And could you make a reasonable amount doing so?
If not in the exact same career category or position, could you do something similar or something else to earn money?

Best wishes! I'm hoping you get to retire or at least pull back.
Unfortunately, no. I work in software but in a very specialized area that isnt really transferrable to other software companies. I could definitely find work if I needed to but it would likely not pay as much as what I make now. I'm a bit of a unicorn in the industry in that I'm not college educated, which is basically a requirement these days for what I do. In fact, my current role requires a minimum of a Masters in CS. That's why I mentioned it would be difficult to come back. Thanks for the kind words btw.
Patzer
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Re: Hit my "number" (I think)...now what?

Post by Patzer »

You should retire now.

At your age, it may not be permanent, but take the years off now, while you are young enough to enjoy them.
Maybe in 5 years you will be bored and want to work a little, and it won't matter to you if the pay is much lower, because you won't need more money, just extra challenges.

Out of everyone I know that is retired, exactly zero of them wished they had worked longer.

I am planning to retire around 50 with a 3.33% SWR, but my employer will be able to get me to stick around longer if they allow me to work 100% remote from locations around the world.
Marseille07
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Re: Hit my "number" (I think)...now what?

Post by Marseille07 »

MindBogler wrote: Wed Jun 16, 2021 5:59 pm Ignore the hyper-conservative 50 - 100x comments. Theirs may be a way but it isn't the way. You will be just fine. It sounds like you've already chosen a relatively conservative AA. The next thing you should do is plan for Roth conversions where possible and when to put in your notice.

Congratulations and enjoy your retirement!

:sharebeer
Yeah I'm surprised by a number of posts calling 3% unsafe and all that. When did the tide turn? I remember the days when people argued 4% SWR is very safe and that you end up with more money than you started with.
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jjunk
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Re: Hit my "number" (I think)...now what?

Post by jjunk »

Patzer wrote: Wed Jun 16, 2021 6:29 pm You should retire now.

At your age, it may not be permanent, but take the years off now, while you are young enough to enjoy them.
Maybe in 5 years you will be bored and want to work a little, and it won't matter to you if the pay is much lower, because you won't need more money, just extra challenges.

Out of everyone I know that is retired, exactly zero of them wished they had worked longer.

I am planning to retire around 50 with a 3.33% SWR, but my employer will be able to get me to stick around longer if they allow me to work 100% remote from locations around the world.
I'm hoping to get a WFH schedule if I can. Others on my team have been able to secure that already, with some even moving out of the country to work in other locales. If I was able to WFH with only sparse time in the office, it would likely extend my desire/ability to continue working a few more years. I've actually been more productive in the pandemic vs. prior to it, so there's likely a decent shot of that happening. If it doesnt work out, it sounds like I'm in a good spot to move on to the next chapter of life if I choose to.

Really appreciate everyone's thoughts and conversation on this topic. Its been very helpful.
Wrench
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Re: Hit my "number" (I think)...now what?

Post by Wrench »

jjunk wrote: Wed Jun 16, 2021 11:50 am Thanks for all the feedback so far, much appreciated.

Since most comments are about expense tracking, we've diligently tracked our spending for the last 10yrs. We're usually the same month to month within a few hundred dollars. So I feel like I have a good handle on how we spend money living the way we do today. Since I want us to maintain that quality of life, I took that number and added the buffer of 3.5k/mo to it.

I came to 3.5k/mo by amortizing things like car purchases, vacations, social memberships (zoo, gym, etc) and finally healthcare. That all seems to fit within that extra money. Healthcare was the trickiest to estimate so what we've done is create a spreadsheet and follow the ACA premium/out of pocket costs for our area over the last 5yrs. We've broken it out into with subsidy and without subsidy numbers to get an idea of the range and then further maxed out one adult on the middle cost plan as a way to come up with our number there. Thats definitely the scariest of the things to try and calculate.

Given I've tried to leave plenty of fat in the planning number, I'm hoping thats safe enough. Only one way to find out :D
Congrats on your financial independence! My one comment: health care expenses will be high, higher and even higher than you anticipate. I left full time employment with health insurance in 2013 at age 58. Cost for a (lousy) bronze plan for DW and I, $1000 per month. Within 4 years, it was ~$2000 per month. I went back to employment with health insurance at that point (for reasons unrelated to health insurance cost - we could afford the $2000 a month). I will guess that for a couple in their early 60s today, it could be more like $2500 or more per month. (Of course it depends on your location, cost of living there, your state, companies that write there, etc.). For you, who knows where it will be in 15 years when you are in your 60s. Then again, maybe the law will change and allow you to get into Medicare when you are 55 or 60. Then maybe the cost will be more like $1000 per month at that point? Who knows.

My only point is: plan for some expensive health care costs - much higher than you might expect. As long as you are prepared and it is in your budget. you should be fine.

Will
Jaymover
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Re: Hit my "number" (I think)...now what?

Post by Jaymover »

MindBogler wrote: Wed Jun 16, 2021 5:59 pm Ignore the hyper-conservative 50 - 100x comments. Theirs may be a way but it isn't the way. You will be just fine. It sounds like you've already chosen a relatively conservative AA. The next thing you should do is plan for Roth conversions where possible and when to put in your notice.

Congratulations and enjoy your retirement!

:sharebeer
I read somewhere that due to low future expected bond yields, expert opinion now considers the magic number as 32x and not 20-25x any more. Also, I believe that future retirees will have to take on more risk and so a 60/40 allocation on retirement is more realistic. Most target funds are 50-55% stocks on retirement. Of course all depends on your situation and capacity to wind back expenses for a few years after a crash. There are many options, eg get a low stress part time job for a while, moving somewhere cheaper, rent out a room, live on the road for a bit whilst renting out the house, going vegetarian, immersing oneself in a cheap hobby whilst dropping any expensive hobbies, stay-cation more, servicing the car yourself etc.
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jjunk
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Re: Hit my "number" (I think)...now what?

Post by jjunk »

Wrench wrote: Wed Jun 16, 2021 6:50 pm
jjunk wrote: Wed Jun 16, 2021 11:50 am Thanks for all the feedback so far, much appreciated.

Since most comments are about expense tracking, we've diligently tracked our spending for the last 10yrs. We're usually the same month to month within a few hundred dollars. So I feel like I have a good handle on how we spend money living the way we do today. Since I want us to maintain that quality of life, I took that number and added the buffer of 3.5k/mo to it.

I came to 3.5k/mo by amortizing things like car purchases, vacations, social memberships (zoo, gym, etc) and finally healthcare. That all seems to fit within that extra money. Healthcare was the trickiest to estimate so what we've done is create a spreadsheet and follow the ACA premium/out of pocket costs for our area over the last 5yrs. We've broken it out into with subsidy and without subsidy numbers to get an idea of the range and then further maxed out one adult on the middle cost plan as a way to come up with our number there. Thats definitely the scariest of the things to try and calculate.

Given I've tried to leave plenty of fat in the planning number, I'm hoping thats safe enough. Only one way to find out :D
Congrats on your financial independence! My one comment: health care expenses will be high, higher and even higher than you anticipate. I left full time employment with health insurance in 2013 at age 58. Cost for a (lousy) bronze plan for DW and I, $1000 per month. Within 4 years, it was ~$2000 per month. I went back to employment with health insurance at that point (for reasons unrelated to health insurance cost - we could afford the $2000 a month). I will guess that for a couple in their early 60s today, it could be more like $2500 or more per month. (Of course it depends on your location, cost of living there, your state, companies that write there, etc.). For you, who knows where it will be in 15 years when you are in your 60s. Then again, maybe the law will change and allow you to get into Medicare when you are 55 or 60. Then maybe the cost will be more like $1000 per month at that point? Who knows.

My only point is: plan for some expensive health care costs - much higher than you might expect. As long as you are prepared and it is in your budget. you should be fine.

Will
Thanks for sharing your personal experience here. Health care is definitely high on the scare factor for us. In my current budget we have it as $2,250/mo for the pair of us. My hope was that early on we wouldnt need that much for health expenses and it would allow us to pay for the higher costs later. Maybe I'll need to recast that number. I have some health issues I'm going through right now which pretty much ensure I'll continue to work until they're taken care of because we have fantastic health insurance at my company.
Marseille07
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Re: Hit my "number" (I think)...now what?

Post by Marseille07 »

Jaymover wrote: Wed Jun 16, 2021 6:55 pm
MindBogler wrote: Wed Jun 16, 2021 5:59 pm Ignore the hyper-conservative 50 - 100x comments. Theirs may be a way but it isn't the way. You will be just fine. It sounds like you've already chosen a relatively conservative AA. The next thing you should do is plan for Roth conversions where possible and when to put in your notice.

Congratulations and enjoy your retirement!

:sharebeer
I read somewhere that due to low future expected bond yields, expert opinion now considers the magic number as 32x and not 20-25x any more. Also, I believe that future retirees will have to take on more risk and so a 60/40 allocation on retirement is more realistic. Most target funds are 50-55% stocks on retirement. Of course all depends on your situation and capacity to wind back expenses for a few years after a crash. There are many options, eg get a low stress part time job for a while, moving somewhere cheaper, rent out a room, live on the road for a bit whilst renting out the house, going vegetarian, immersing oneself in a cheap hobby whilst dropping any expensive hobbies, stay-cation more, servicing the car yourself etc.
Where did you read this, at Financial Samurai? If anything, Mr. Bengen upped the famous rule to 4.5%: https://earlyretirementdude.com/summary ... or-4-rule/
MindBogler
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Re: Hit my "number" (I think)...now what?

Post by MindBogler »

Jaymover wrote: Wed Jun 16, 2021 6:55 pm
MindBogler wrote: Wed Jun 16, 2021 5:59 pm Ignore the hyper-conservative 50 - 100x comments. Theirs may be a way but it isn't the way. You will be just fine. It sounds like you've already chosen a relatively conservative AA. The next thing you should do is plan for Roth conversions where possible and when to put in your notice.

Congratulations and enjoy your retirement!

:sharebeer
I read somewhere that due to low future expected bond yields, expert opinion now considers the magic number as 32x and not 20-25x any more. Also, I believe that future retirees will have to take on more risk and so a 60/40 allocation on retirement is more realistic. Most target funds are 50-55% stocks on retirement. Of course all depends on your situation and capacity to wind back expenses for a few years after a crash. There are many options, eg get a low stress part time job for a while, moving somewhere cheaper, rent out a room, live on the road for a bit whilst renting out the house, going vegetarian, immersing oneself in a cheap hobby whilst dropping any expensive hobbies, stay-cation more, servicing the car yourself etc.
Even 25x ignoring SS is already extremely conservative IMO.
ahoffme
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Re: Hit my "number" (I think)...now what?

Post by ahoffme »

Normchad wrote: Wed Jun 16, 2021 6:24 pm
Kenkat wrote: Wed Jun 16, 2021 6:14 pm
jjunk wrote: Wed Jun 16, 2021 1:52 pm
Kenkat wrote: Wed Jun 16, 2021 1:40 pm Now that you’ve hit your number, the next step is to agonize about what to do about it. I am in similar circumstances and it’s a daily ritual - at least on work days :wink:
LOL definitely. I think my company's direction on WFH will play a large part in how 'swayed' I am towards one side or the other. Congrats on hitting your number btw.
I will add that part of my issue is that I hit my number a little earlier than I was planning and so now my question becomes whether or not a couple of extra years of withdraws will matter. My conclusion is they will not, but it still leaves a little nagging doubt. More money is always better than less. What if I retire and my portfolio drops 20%? I’d be ok, but not as ok if it didn’t or if I had even more.

In addition to that, I had an idea of what age I would probably retire at and that’s still 18+ months out as well - and I’m not 100% on that either. I did pick a date and start a countdown clock at the advice of a now retired co-worker, but that date is only known to me. I think I started somewhere above 1150 days and now am below 600. He (my co-worker) said it would go fast and he’s been right.

At this point, I tell people I am either retiring in 5 years or tomorrow - it just depends on the day. Like you, a lot really does depend on how things go. Will I realize the commute just isn’t worth it anymore when I return to the office? How will I feel about it if it’s just 2-3 days a week? How about getting on a plane and traveling again for work? Not something I do a lot (2-3x year) but it’s tiring at my age - but also I have to admit it breaks up the routine and there is a bit of it I do look forward to as well. Will the job go smoothly or will something happen to make it a living h....well, you get what I mean.

The nice thing is I feel I have options and I am pretty much in control of my own fate work-wise. That’s a really great feeling.
Same boat. I reached the number earlier than anticipated.

So here is something else to agonize over. By walking away “early”, I’m leaving money on the table. But it’s not money that I need.

But that is money that I could use to help aging parents, or spend on kids weddings, or contribute to charity. So am I being selfish by walking away? I don’t think I am. But maybe there will come a day when I wish I had an extra $100K to help out a family member? I may not ever need that. But leaving now means I will never be able to do it, even if I wanted too.
Well, I think you just hit our nail on the head! We’ve been at our number for quite a while but that FOMO is still there. While we would be perfectly fine with no further income, my wife still worries about paying for our daughters wedding (who is 5 now), etc, etc. It’s a really tough balancing act.
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Kenkat
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Re: Hit my "number" (I think)...now what?

Post by Kenkat »

ahoffme wrote: Wed Jun 16, 2021 7:59 pm
Normchad wrote: Wed Jun 16, 2021 6:24 pm
Kenkat wrote: Wed Jun 16, 2021 6:14 pm
jjunk wrote: Wed Jun 16, 2021 1:52 pm
Kenkat wrote: Wed Jun 16, 2021 1:40 pm Now that you’ve hit your number, the next step is to agonize about what to do about it. I am in similar circumstances and it’s a daily ritual - at least on work days :wink:
LOL definitely. I think my company's direction on WFH will play a large part in how 'swayed' I am towards one side or the other. Congrats on hitting your number btw.
I will add that part of my issue is that I hit my number a little earlier than I was planning and so now my question becomes whether or not a couple of extra years of withdraws will matter. My conclusion is they will not, but it still leaves a little nagging doubt. More money is always better than less. What if I retire and my portfolio drops 20%? I’d be ok, but not as ok if it didn’t or if I had even more.

In addition to that, I had an idea of what age I would probably retire at and that’s still 18+ months out as well - and I’m not 100% on that either. I did pick a date and start a countdown clock at the advice of a now retired co-worker, but that date is only known to me. I think I started somewhere above 1150 days and now am below 600. He (my co-worker) said it would go fast and he’s been right.

At this point, I tell people I am either retiring in 5 years or tomorrow - it just depends on the day. Like you, a lot really does depend on how things go. Will I realize the commute just isn’t worth it anymore when I return to the office? How will I feel about it if it’s just 2-3 days a week? How about getting on a plane and traveling again for work? Not something I do a lot (2-3x year) but it’s tiring at my age - but also I have to admit it breaks up the routine and there is a bit of it I do look forward to as well. Will the job go smoothly or will something happen to make it a living h....well, you get what I mean.

The nice thing is I feel I have options and I am pretty much in control of my own fate work-wise. That’s a really great feeling.
Same boat. I reached the number earlier than anticipated.

So here is something else to agonize over. By walking away “early”, I’m leaving money on the table. But it’s not money that I need.

But that is money that I could use to help aging parents, or spend on kids weddings, or contribute to charity. So am I being selfish by walking away? I don’t think I am. But maybe there will come a day when I wish I had an extra $100K to help out a family member? I may not ever need that. But leaving now means I will never be able to do it, even if I wanted too.
Well, I think you just hit our nail on the head! We’ve been at our number for quite a while but that FOMO is still there. While we would be perfectly fine with no further income, my wife still worries about paying for our daughters wedding (who is 5 now), etc, etc. It’s a really tough balancing act.
Yes, all these things go through my mind as well.
Tingting1013
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Re: Hit my "number" (I think)...now what?

Post by Tingting1013 »

ahoffme wrote: Wed Jun 16, 2021 7:59 pm
Normchad wrote: Wed Jun 16, 2021 6:24 pm
Kenkat wrote: Wed Jun 16, 2021 6:14 pm
jjunk wrote: Wed Jun 16, 2021 1:52 pm
Kenkat wrote: Wed Jun 16, 2021 1:40 pm Now that you’ve hit your number, the next step is to agonize about what to do about it. I am in similar circumstances and it’s a daily ritual - at least on work days :wink:
LOL definitely. I think my company's direction on WFH will play a large part in how 'swayed' I am towards one side or the other. Congrats on hitting your number btw.
I will add that part of my issue is that I hit my number a little earlier than I was planning and so now my question becomes whether or not a couple of extra years of withdraws will matter. My conclusion is they will not, but it still leaves a little nagging doubt. More money is always better than less. What if I retire and my portfolio drops 20%? I’d be ok, but not as ok if it didn’t or if I had even more.

In addition to that, I had an idea of what age I would probably retire at and that’s still 18+ months out as well - and I’m not 100% on that either. I did pick a date and start a countdown clock at the advice of a now retired co-worker, but that date is only known to me. I think I started somewhere above 1150 days and now am below 600. He (my co-worker) said it would go fast and he’s been right.

At this point, I tell people I am either retiring in 5 years or tomorrow - it just depends on the day. Like you, a lot really does depend on how things go. Will I realize the commute just isn’t worth it anymore when I return to the office? How will I feel about it if it’s just 2-3 days a week? How about getting on a plane and traveling again for work? Not something I do a lot (2-3x year) but it’s tiring at my age - but also I have to admit it breaks up the routine and there is a bit of it I do look forward to as well. Will the job go smoothly or will something happen to make it a living h....well, you get what I mean.

The nice thing is I feel I have options and I am pretty much in control of my own fate work-wise. That’s a really great feeling.
Same boat. I reached the number earlier than anticipated.

So here is something else to agonize over. By walking away “early”, I’m leaving money on the table. But it’s not money that I need.

But that is money that I could use to help aging parents, or spend on kids weddings, or contribute to charity. So am I being selfish by walking away? I don’t think I am. But maybe there will come a day when I wish I had an extra $100K to help out a family member? I may not ever need that. But leaving now means I will never be able to do it, even if I wanted too.
Well, I think you just hit our nail on the head! We’ve been at our number for quite a while but that FOMO is still there. While we would be perfectly fine with no further income, my wife still worries about paying for our daughters wedding (who is 5 now), etc, etc. It’s a really tough balancing act.
The Boglehead thing to do would be for your daughter to pay for her own wedding, or better yet, have a backyard wedding!

:oops:
ChrisRx
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Re: Hit my "number" (I think)...now what?

Post by ChrisRx »

novolog wrote: Wed Jun 16, 2021 12:20 pm
RubyTuesday wrote: Wed Jun 16, 2021 11:10 am In today’s low-yield environment, 3% is not really all that conservative.
agreed - should aim for 1.5% w/d rate
Is this a joke, or are you seriously implying to dangle that carrot 🥕 further out?
Patzer
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Re: Hit my "number" (I think)...now what?

Post by Patzer »

jjunk wrote: Wed Jun 16, 2021 6:37 pm
Patzer wrote: Wed Jun 16, 2021 6:29 pm You should retire now.

At your age, it may not be permanent, but take the years off now, while you are young enough to enjoy them.
Maybe in 5 years you will be bored and want to work a little, and it won't matter to you if the pay is much lower, because you won't need more money, just extra challenges.

Out of everyone I know that is retired, exactly zero of them wished they had worked longer.

I am planning to retire around 50 with a 3.33% SWR, but my employer will be able to get me to stick around longer if they allow me to work 100% remote from locations around the world.
I'm hoping to get a WFH schedule if I can. Others on my team have been able to secure that already, with some even moving out of the country to work in other locales. If I was able to WFH with only sparse time in the office, it would likely extend my desire/ability to continue working a few more years. I've actually been more productive in the pandemic vs. prior to it, so there's likely a decent shot of that happening. If it doesnt work out, it sounds like I'm in a good spot to move on to the next chapter of life if I choose to.

Really appreciate everyone's thoughts and conversation on this topic. Its been very helpful.
FWIW, I am an software engineering manager. We were 2 days WFH before the pandemic and plan to be 3 days WFH after the pandemic.

If you were a star on my team, I would be pretty flexible about trying to keep you versus losing you to retirement. That might look like 1 day a week in the office, or if you were to move too far from the office to commute regularly (i.e. you moved 1.5+ hours away), maybe just come in once a month for a team bonding activity.

I would really encourage you to talk to your boss in your one on ones in a non-forceful and very honest way, saying that you have reached your financial goals to retire, but still really enjoy the work. That said, the idea of coming back into the office is not very appealing, and you are hoping to work together on a solution to minimize time in the office, so that work remains a positive experience for you and you can continue to contribute to the company's success.
The key to any negotiation is not to make it your boss's problem, but to make it a shared problem. It's you and your boss working together to fix this "coming into the office thing" that is getting in the way of your continued contributions.
If your manager is at all good at their job, and has any leeway with their authority, they should pick up what you are saying and find a way to make it work.
MoonOrb
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Re: Hit my "number" (I think)...now what?

Post by MoonOrb »

You're good to go at 33x including an additional $40k/year. This is a no brainer.

You're financially independent now: go ahead and ask your work for what you want (reduced schedule, sabbatical, more annual leave, whatever) and if you don't get it you can pull the pin today.

Congrats!
Exchme
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Re: Hit my "number" (I think)...now what?

Post by Exchme »

So OP has tracked his expenses, made estimates of health care casts, made allowances for expenses well beyond his spending, hasn't given himself credit for SS that will arrive someday and still has a 3% withdrawal rate.

OP: None of us knows the future, but by all historical measurements, you are due for congratulations, you've made it to FI! Now comes the tough decision of do you want to pull the plug right away, build up a little cash, save for that one more home improvement project, finish that last assignment at work, keep going until a bonus arrives and the hundred other things that keep us chained to our desk until our health has drained away. If you feel like your job is hurting your health, then continuing to work is the riskier path, so give your notice and throw yourself a retirement party.
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HomerJ
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Re: Hit my "number" (I think)...now what?

Post by HomerJ »

Normchad wrote: Wed Jun 16, 2021 6:24 pm Same boat. I reached the number earlier than anticipated.

So here is something else to agonize over. By walking away “early”, I’m leaving money on the table. But it’s not money that I need.

But that is money that I could use to help aging parents, or spend on kids weddings, or contribute to charity. So am I being selfish by walking away? I don’t think I am. But maybe there will come a day when I wish I had an extra $100K to help out a family member? I may not ever need that. But leaving now means I will never be able to do it, even if I wanted too.
Man, this is me too...

I hit my number and went a little past it, but it was far sooner than I thought...

My wife is a little freaked out about health care... and she's not totally wrong... (she has chronic low-level issues that will require a lot of doctor visits)

I also think about my kids and my parents and my sister. Maybe I should work another year or two.

But then I see my wife with chronic health issues, and my brother-in-law with his chronic health issues, and my sister-in-law with her chronic health issues (nothing deadly, but they do impact life... we're talking arthritis and knee and hip replacements, and possible muscle degeneration (over time), etc.)

And I think, "Why do I want to wait until that stuff happens to me too??!"

Cause it WILL happen to me too...
Last edited by HomerJ on Wed Jun 16, 2021 9:28 pm, edited 1 time in total.
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HomerJ
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Re: Hit my "number" (I think)...now what?

Post by HomerJ »

Exchme wrote: Wed Jun 16, 2021 9:24 pm So OP has tracked his expenses, made estimates of health care casts, made allowances for expenses well beyond his spending, hasn't given himself credit for SS that will arrive someday and still has a 3% withdrawal rate.
Yeah ignore the super-conservatives on this board.

3%, and you haven't even included Social Security?? You're golden.
"The best tools available to us are shovels, not scalpels. Don't get carried away." - vanBogle59
GoFish
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Re: Hit my "number" (I think)...now what?

Post by GoFish »

Congrats on your financial independence! I also think you are highly unlikely to have any money concerns if you retire now.

As a 6-year retiree (who retired a little early), here’s what my experience says:

1. It is important that you have some things that make you feel “worthwhile” once your job ends.

2. Your interests and priorities are likely to evolve during retirement. This may require more monthly spending.

3. I spend more time and money on house things than previously because it has become more important to me.

4. Health insurance is a major PITA and a big money pit. I got a part-year job teaching and it gave me access to employer health insurance (and COBRA) to carry me to Medicare.
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Re: Hit my "number" (I think)...now what?

Post by helloeveryone »

jjunk wrote: Wed Jun 16, 2021 11:01 am As part of my planning, I put together a spreadsheet a while back which did a simple math calculation for various stagnant withdrawal rates. Effectively =(monthly expenses x12)SWR. For example, for a 5k/mo expense retirement at a stagnant 3% WR I'd need (5000x12)33.3=1.998M. I dont plan on having a stagnant withdrawal rate personally but it was how I came up with my "number" for planning purposes. I've been using the 3% stagnant as my goal given it being conservative and I'd be retiring relatively young if I pulled the plug (currently 47).

Today I hit the "number" on my spreadsheet. Yay. But it got me to thinking what I should do from here and if I calculated the number correctly in the first place. For starters, we chose a number thats higher than our currently monthly expenses by a fairly large amount (~3.5k/mo extra over required spending) to account for things like healthcare, vehicle purchases, taxes, etc. I feel that is done correctly but wonder if I missed something. Then given I'm using a 3% WR, I feel thats pretty conservative as well and serves as an additional safety buffer. Assuming I've calculated this all correctly, I could retire today if I really wanted to.

I dont include social security in my planning and I dont have any backstop (inheritance, pension, etc). When I pull the plug, I wont be coming back to the workforce in a way which will come near the total comp I earn today. My current job is fine but my health is not. I've been burnt out for quite a while now. But if I quit, even to take a break from full time work, then I'd be doing so knowing my next job will pay 50-60% less than I make now (if not more). So I want to make sure I'm as right as I can be before considering retiring.

Questions for the forum are:

1. Did I miss anything in my calculations above?
2. Once you hit your number, what did you do and how did you approach final planning to actually retire?
As others indicate you have met your financial goals and you’ve modeled things out very conservatively. You mention health is not fine….that is your #1 indicator in my mind to go ahead and stop working. You hit the numbers, your health is not fine…quit working. That gives you an extra 40+ hours a week for your health and wellbeing
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Re: Hit my "number" (I think)...now what?

Post by reader79 »

OP,

Congrats! You no longer need to worry about money. You may benefit from watching this excellent Rational Reminder podcast where the guest is Bill Bengen. Once you listen to the author of the 4% rule talk about your specific issue, you'll realize that you're fine and you can move on with whatever you want to do.

Here is the link: https://youtu.be/_nYTrCxluaY
VTI: 50%, QQQM: 30%, VO: 10%, VB: 10%
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Re: Hit my "number" (I think)...now what?

Post by chipperd »

jjunk wrote: Wed Jun 16, 2021 1:14 pm
Random Poster wrote: Wed Jun 16, 2021 1:05 pm
jjunk wrote: Wed Jun 16, 2021 11:01 am For starters, we chose a number thats higher than our currently monthly expenses by a fairly large amount (~3.5k/mo extra over required spending) to account for things like healthcare, vehicle purchases, taxes, etc. I feel that is done correctly but wonder if I missed something. Then given I'm using a 3% WR, I feel thats pretty conservative as well and serves as an additional safety buffer. Assuming I've calculated this all correctly, I could retire today if I really wanted to.
Are you saying that your actual monthly expenses are $1,500? And what does “required spending” mean?

And what is your asset allocation?

Personally, 3% doesn’t strike me as conservative, and your numbers are too low for my sense of safety.

For me, I generally did the math this way as a mid 40k’s person with a roughly 50/50 portfolio:

Take the average of the last 3 or 5 years of total annual spending, multiplied that by anywhere from 1.25 to 1.5, then multiplied that result by another 1.10 to 1.20 to get my spending number. Then multiplied that number by 50 to get the saving number.

So, $54k a year in real annual spending becomes $67,500 to $81k, which then becomes somewhere between $74,250 to 97,200 in presumed annual spending, which gives a saving number between $3,712,500 to $4,860,000.

I honestly think that only by significantly inflating your spending amount and lowering your withdrawal rate to something approaching the dividend/interest rate do you reach “conservative” status.

And, even then, I’m not entirely comfortable with things.
From a numbers perspective, my current monthly expenses average ~5.5k. Our planning number was 9k and we're just over 3.6M across our accounts. Of the 5.5k we spend today, more than half is rent. We live outside of Seattle so its VHCOL area. One thing we're considering once we retire is to move to a slightly less expensive area outside of the city which will cut down on our rent a little (~200-500/mo). Using your formula above, I'd need almost 6M to be able to retire. Thats way more than I'll need.

A few things I didnt mention here but have mentioned in previous posts. I dont have children. I dont have a need to leave a legacy. And past history tells me living past 80-85 is very unlikely. I usually do planning and Monte Carlo scenarios using a 40yr horizon just to be even more conservative, but I doubt I'm alive 30 years from now. My wife will likely be around for a couple more than me, hard to say. So I'm perfectly fine leaving this existence with zero to my name....in many ways, thats the goal.
Assuming the bolded/highlighted above is understood, your monthly expenses, all in (taxes, lumpy expenses, etc...), average $5,500/month or $66,000/year. You have $3,600,000 saved. So your withdraw rate would be 1.8% (66,000/3,600,000) no?
This is prior to social security for you and wife correct?
Please let me know if I'm understanding correctly.
"A portfolio is like a bar of soap, the more it's handled, the less there is." Dr. William Bernstein
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Re: Hit my "number" (I think)...now what?

Post by RubyTuesday »

Ramjet wrote: Wed Jun 16, 2021 11:59 am
RubyTuesday wrote: Wed Jun 16, 2021 11:10 am In today’s low-yield environment, 3% is not really all that conservative
A 3% withdrawal rate means that you can withdrawal 3% of assets every year for the next 33 years without ANY portfolio growth whatsoever. This is the definition of conservative
OP is 47. 33 years is not nearly long enough. 30 year TIPs negative real yield.
Will 3% work for early retirement and long life? Maybe. “Conservative” is a continuum, and 3% in today’s low yield environment is not all that conservative for 40-50 years.
“Doing nothing is better than being busy doing nothing.” – Lao Tzu
Ramjet
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Re: Hit my "number" (I think)...now what?

Post by Ramjet »

RubyTuesday wrote: Thu Jun 17, 2021 5:35 am
Ramjet wrote: Wed Jun 16, 2021 11:59 am
RubyTuesday wrote: Wed Jun 16, 2021 11:10 am In today’s low-yield environment, 3% is not really all that conservative
A 3% withdrawal rate means that you can withdrawal 3% of assets every year for the next 33 years without ANY portfolio growth whatsoever. This is the definition of conservative
OP is 47. 33 years is not nearly long enough. 30 year TIPs negative real yield.
Will 3% work for early retirement and long life? Maybe. “Conservative” is a continuum, and 3% in today’s low yield environment is not all that conservative for 40-50 years.
3% is more conservative than even a perpetual withdrawal rate
https://portfoliocharts.com/2016/12/09/ ... etirement/
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Re: Hit my "number" (I think)...now what?

Post by RubyTuesday »

Ramjet wrote: Thu Jun 17, 2021 5:38 am
RubyTuesday wrote: Thu Jun 17, 2021 5:35 am
Ramjet wrote: Wed Jun 16, 2021 11:59 am
RubyTuesday wrote: Wed Jun 16, 2021 11:10 am In today’s low-yield environment, 3% is not really all that conservative
A 3% withdrawal rate means that you can withdrawal 3% of assets every year for the next 33 years without ANY portfolio growth whatsoever. This is the definition of conservative
OP is 47. 33 years is not nearly long enough. 30 year TIPs negative real yield.
Will 3% work for early retirement and long life? Maybe. “Conservative” is a continuum, and 3% in today’s low yield environment is not all that conservative for 40-50 years.
3% is more conservative than even a perpetual withdrawal rate
https://portfoliocharts.com/2016/12/09/ ... etirement/
Says Tyler the mechanical engineer with a blog?

From portfoliocharts.com
Hi. I’m Tyler.

You might be wondering why an anonymous guy on the internet is publishing an investing website with a bunch of free portfolio tools. Who is that guy? What’s the catch? And why should I trust his numbers?

I’m a mechanical engineer with a strong math education, a deep personal interest in finance and investing, and some nifty Excel skills I’ve picked up along the way.
I’m suspect he’s talented and intelligent, but his analysis only uses data starting in 1970 and is based solely on historical returns. Does anyone think with today’s negative real yields and high asset valuations that assuming past is prolog is conservative? I would not trust my 50 year retirement to Kyle, YMMV.

That said, with OPs additional info provided about how he’s budgeted (which I expressed as my major concern) and also taking into acct he isn’t including SS retirement benefits, I definitely think he’s “good to go.”

But generally for others with 40-50 years of retirement, IMO 3% isn’t all that conservative.
“Doing nothing is better than being busy doing nothing.” – Lao Tzu
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Re: Hit my "number" (I think)...now what?

Post by jjunk »

chipperd wrote: Thu Jun 17, 2021 5:27 am Assuming the bolded/highlighted above is understood, your monthly expenses, all in (taxes, lumpy expenses, etc...), average $5,500/month or $66,000/year. You have $3,600,000 saved. So your withdraw rate would be 1.8% (66,000/3,600,000) no?
This is prior to social security for you and wife correct?
Please let me know if I'm understanding correctly.
It's correct that my expenses today are 5500/mo but that figure doesnt include health insurance because my employer pays for that today. We estimate that as 2250/mo in our planning. So it makes the number more like 2.6% once you include health care. Throw in all our other projected expenses and thats how we got to 9k/mo for planning. To be clear, I rarely think we'll spend anywhere close to that because we feel like we live really well under our current expenses. So realistically if I had to guess, we're likely closer to 6500-7000/mo in actual annual expenses once we pull the plug. I'm just trying to account for as many variables as I can.
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William Million
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Re: Hit my "number" (I think)...now what?

Post by William Million »

An odd quirk of this forum is opsessive conservatism. 3 percent SWR is extremely conservative. 1.5 percent is nuts.
Ramjet
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Re: Hit my "number" (I think)...now what?

Post by Ramjet »

William Million wrote: Thu Jun 17, 2021 6:45 am An odd quirk of this forum is opsessive conservatism. 3 percent SWR is extremely conservative. 1.5 percent is nuts.
For sure, not everyone can and will be rich
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Re: Hit my "number" (I think)...now what?

Post by Hues10 »

Good reading and ideas all over the board. I often tell my new wife, that to have a net worth of $1M or more (not including house equity), one would have more than 95% of US households. So for the 95% of the people who did not save enough for retirement, I don’t see 95 out of 100 people homeless, starving, and laying in the street because they have no money. Realize that most people here just don’t want to survive and not starve, but most people in America do not. This person has $2 million dollars and spends at most $60k per year. 33 years in the “bank” with no growth assumed and no SS taken into account. The only thing you do not get back on this earth is time. Can’t buy more, but certainly it can be wasted. If your heart and mind say to retire, you can. If you want to save more, go ahead. It is your choice which is where I think we all want to be or get to. I believe that is the definition of FI.
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Re: Hit my "number" (I think)...now what?

Post by sean.mcgrath »

Patzer wrote: Wed Jun 16, 2021 8:30 pm
FWIW, I am an software engineering manager. We were 2 days WFH before the pandemic and plan to be 3 days WFH after the pandemic.

If you were a star on my team, I would be pretty flexible about trying to keep you versus losing you to retirement. That might look like 1 day a week in the office, or if you were to move too far from the office to commute regularly (i.e. you moved 1.5+ hours away), maybe just come in once a month for a team bonding activity.

I would really encourage you to talk to your boss in your one on ones in a non-forceful and very honest way, saying that you have reached your financial goals to retire, but still really enjoy the work. That said, the idea of coming back into the office is not very appealing, and you are hoping to work together on a solution to minimize time in the office, so that work remains a positive experience for you and you can continue to contribute to the company's success.
The key to any negotiation is not to make it your boss's problem, but to make it a shared problem. It's you and your boss working together to fix this "coming into the office thing" that is getting in the way of your continued contributions.
If your manager is at all good at their job, and has any leeway with their authority, they should pick up what you are saying and find a way to make it work.
+1, this is excellent advice. In fact, due to learnings from Covid, we have moved from "if you were a rock star" to "if you are a valued employee" in terms of when we are likely to show this flexibility.

In any case, your finances are rock solid and the 2022 roll call just opened! Feel free to join us. :sharebeer
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Re: Hit my "number" (I think)...now what?

Post by vanbogle59 »

47. Ah youth. :happy

I, too, am reaching my magic number. Alas, I have a few more years under my belt than you. But I have the same concerns about what the number tells me.

After lots of reading, lots of talks with DW and lots of looking in the mirror, I've landed here:
The 4% rule is pretty "safe". Of course 3% is "safer". But nothing is guaranteed.
At some point, you just have to accept the uncertainty.

Maybe this will help. Even if you keep working, there is still some non-zero chance that your life will fall apart (you make a bad decision, you get sick, your social circle betrays you, your government collapses, Mt. St. Helens....).

I've decided I'm just going to try to be reasonable, not perfect. I'm sure the unexpected will occur. I'll deal with it the best I can over the years that are left to me.
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Re: Hit my "number" (I think)...now what?

Post by Kenkat »

jjunk wrote: Thu Jun 17, 2021 6:24 am
chipperd wrote: Thu Jun 17, 2021 5:27 am Assuming the bolded/highlighted above is understood, your monthly expenses, all in (taxes, lumpy expenses, etc...), average $5,500/month or $66,000/year. You have $3,600,000 saved. So your withdraw rate would be 1.8% (66,000/3,600,000) no?
This is prior to social security for you and wife correct?
Please let me know if I'm understanding correctly.
It's correct that my expenses today are 5500/mo but that figure doesnt include health insurance because my employer pays for that today. We estimate that as 2250/mo in our planning. So it makes the number more like 2.6% once you include health care. Throw in all our other projected expenses and thats how we got to 9k/mo for planning. To be clear, I rarely think we'll spend anywhere close to that because we feel like we live really well under our current expenses. So realistically if I had to guess, we're likely closer to 6500-7000/mo in actual annual expenses once we pull the plug. I'm just trying to account for as many variables as I can.
If you can manage your yearly income, you should be able to qualify for an ACA subsidy and lower your monthly healthcare cost fairly substantially. I don’t know your exact circumstances so maybe you have already considered this but mentioning it in case you haven’t. You can get estimates at www.healthcare.gov.
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William Million
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Re: Hit my "number" (I think)...now what?

Post by William Million »

Living off less than 3 percent when you could have done 4 percent is not success but failure - failure to correctly draw down savings. How many well deserved pleasures do you pass up in order to embrace irrational frugality?
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Re: Hit my "number" (I think)...now what?

Post by Zeno »

William Million wrote: Thu Jun 17, 2021 8:04 am Living off less than 3 percent when you could have done 4 percent is not success but failure - failure to correctly draw down savings. How many well deserved pleasures do you pass up in order to embrace irrational frugality?
The SWR metrics are based on drawdown of one's portfolio. Even dying with $1 left in the bank is deemed success.

Some of us are uncomfortable with that. I understand that no rational person would draw down the same amount blindly, year after year, in an extended, declining market. But still, the SWR metrics are effectively based on exhaustion of one's portfolio.

As a fellow in my late 50's, I've also seen the unanticipated problems that life can throw my way -- many of them health related -- later in one's life.

Additionally, focusing only on one's needs ("well deserved pleasures") might be viewed as selfish by some. Some of us want to leave money for children or charities. I've lived a fortunate life and would like to give back to family and society in my later years. I don't view my portfolio as "all about me." I would prefer to help fund my grandchildren's college than buy a vacation house for myself. If I have to engage in some "irrational frugality" to achieve those broader aims, I'm quite content with that.
Last edited by Zeno on Thu Jun 17, 2021 8:21 am, edited 1 time in total.
BadgerInBerkeley
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Re: Hit my "number" (I think)...now what?

Post by BadgerInBerkeley »

novolog wrote: Wed Jun 16, 2021 12:20 pm
RubyTuesday wrote: Wed Jun 16, 2021 11:10 am In today’s low-yield environment, 3% is not really all that conservative.
agreed - should aim for 1.5% w/d rate
Holy cow! Really!?

Why such a low rate?
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Re: Hit my "number" (I think)...now what?

Post by 4nursebee »

jjunk wrote: Wed Jun 16, 2021 11:01 am As part of my planning, I put together a spreadsheet a while back which did a simple math calculation for various stagnant withdrawal rates. Effectively =(monthly expenses x12)SWR. For example, for a 5k/mo expense retirement at a stagnant 3% WR I'd need (5000x12)33.3=1.998M. I dont plan on having a stagnant withdrawal rate personally but it was how I came up with my "number" for planning purposes. I've been using the 3% stagnant as my goal given it being conservative and I'd be retiring relatively young if I pulled the plug (currently 47).

Today I hit the "number" on my spreadsheet. Yay. But it got me to thinking what I should do from here and if I calculated the number correctly in the first place. For starters, we chose a number thats higher than our currently monthly expenses by a fairly large amount (~3.5k/mo extra over required spending) to account for things like healthcare, vehicle purchases, taxes, etc. I feel that is done correctly but wonder if I missed something. Then given I'm using a 3% WR, I feel thats pretty conservative as well and serves as an additional safety buffer. Assuming I've calculated this all correctly, I could retire today if I really wanted to.

I dont include social security in my planning and I dont have any backstop (inheritance, pension, etc). When I pull the plug, I wont be coming back to the workforce in a way which will come near the total comp I earn today. My current job is fine but my health is not. I've been burnt out for quite a while now. But if I quit, even to take a break from full time work, then I'd be doing so knowing my next job will pay 50-60% less than I make now (if not more). So I want to make sure I'm as right as I can be before considering retiring.

Questions for the forum are:

1. Did I miss anything in my calculations above?
2. Once you hit your number, what did you do and how did you approach final planning to actually retire?
I am a lazy reader and did not check your math. It is your money, your plans, you have to be happy with it.
Hitting the number was really just one part of what has to happen. It is really so much more. We had to decide on a safety net, a withdrawal method, what to do in bad times, what to do in good times. For maybe 5 years we kept track of every receipt to KNOW what our expenses were. Then taxes and insurance had to be added in, along with a fudge factor.

What we did.
1. Saved two years of living expenses in the bank (beyond fixed sources like pension and SS)-aka E fund
2. Decide on withdrawal method. We chose VPW. FYI 5%!!!
3. Stick to a plan of pulling money out of retirement accounts even if we did not need it, adding to E fund. Spend down from E fund if withdrawals are not enough (they have been enough)
4. Became familiar with tax rates.
5. Moved some 401K to an annuity for a base level of income to give peace of mind and delay SS> Annuity on a time limited payout until SS starts, then it ends. An ol timer round here degraded us for this annuity strategy but it has been a great solution for us.
6. One of retired first, the other stayed full time, then went full time, then quit. This likely helped the anxiety levels.

Hope this helps
Pale Blue Dot
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Re: Hit my "number" (I think)...now what?

Post by Wanderingwheelz »

For what it’s worth, I recent quit paid work and I use 3% for our planning when it’s time for us to withdrawal. DW is still earning, so no withdrawals until she decides she’s had enough.

3.3MM was my “number” (home equity excluded) figuring $100,000/yr in a hypothetical retirement was enough to squeak by on since we spend only a fraction of that now, even accounting for pricey health insurance DWs biz pays for. Even if there is an odd year now and then where spending goes higher, I wouldn’t sweat it, since there’s a huge gap between 3% and 4% once you get to a certain size nest egg. In reality, most years will be below 3% because that’s how most of us got to the point where we are. People don’t change.
Being wrong compounds forever.
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William Million
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Re: Hit my "number" (I think)...now what?

Post by William Million »

Claiming the 4 percent rule no longer applies due to an arbitrary factor such as current FI rates is market timing. Low FI rates are just as likely to lead to higher returns for diversified portfolios (holding equities). If an investor is too conservative to draw his portfolio, that's fine - but it's silly to claim anyone has figured out that the 4 percent rule no longer applies for investors in general.
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Re: Hit my "number" (I think)...now what?

Post by Marseille07 »

Wanderingwheelz wrote: Thu Jun 17, 2021 8:33 am For what it’s worth, I recent quit paid work and I use 3% for our planning when it’s time for us to withdrawal. DW is still earning, so no withdrawals until she decides she’s had enough.

3.3MM was my “number” (home equity excluded) figuring $100,000/yr in a hypothetical retirement was enough to squeak by on since we spend only a fraction of that now, even accounting for pricey health insurance DWs biz pays for. Even if there is an odd year now and then where spending goes higher, I wouldn’t sweat it, since there’s a huge gap between 3% and 4% once you get to a certain size nest egg. In reality, most years will be below 3% because that’s how most of us got to the point where we are. People don’t change.
How much LTCG do you expect to pay? I don't think 3.3M@3% would let you spend 100K/year.
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Re: Hit my "number" (I think)...now what?

Post by Candor »

Some on this board, as demonstrated in this thread, let fear dictate their life. Ignore the ultra-conservative as noise. By all reasonable accounts you are in great shape so don't let the irrational fears of others sway you.
The fool, with all his other faults, has this also - he is always getting ready to live. - Seneca Epistles < c. 65AD
Wanderingwheelz
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Re: Hit my "number" (I think)...now what?

Post by Wanderingwheelz »

Marseille07 wrote: Thu Jun 17, 2021 8:52 am
Wanderingwheelz wrote: Thu Jun 17, 2021 8:33 am For what it’s worth, I recent quit paid work and I use 3% for our planning when it’s time for us to withdrawal. DW is still earning, so no withdrawals until she decides she’s had enough.

3.3MM was my “number” (home equity excluded) figuring $100,000/yr in a hypothetical retirement was enough to squeak by on since we spend only a fraction of that now, even accounting for pricey health insurance DWs biz pays for. Even if there is an odd year now and then where spending goes higher, I wouldn’t sweat it, since there’s a huge gap between 3% and 4% once you get to a certain size nest egg. In reality, most years will be below 3% because that’s how most of us got to the point where we are. People don’t change.
How much LTCG do you expect to pay? I don't think 3.3M@3% would let you spend 100K/year.
There won’t be much LTCG to pay at all. Dividends are a huge part of income for us and will be even more so by the time DW hangs it up, which could be awhile since she loves her biz and is several years younger than me. She will either sell her business or liquidate it for cash which will also provide us a nice cushion of several years of retirement spending- perhaps as many as 10. I don’t count the value of her business in any of our retirement planning, but it’s worth what it’s worth someday down the road and with Amazon and all of the other bloodthirsty competitors who knows what that will be. It’s a guess. It’s not much different than guessing an inheritance.

You can work up a 3% SWR rate on whatever size nest egg you want to to get your withdrawal where you need yours to be. I did ours the way I did ours. Nobody has the same needs or plan as my wife and I, I suspect. The very rough math of the 4% rule is $40,000 per $1,000,000 and the very rough math of the 3% rule would be $30,000 per $1,000,000, so that’s $90,000 per $3,000,000 and add another $10,000 for the $300,000, which gives me $100,000/yr on the back of the envelope. Nothing here is something we’re going to sit through a math class over since it’s very basic. It’s all just a place to start and then take life as it comes and then make adjustments as needed. Retiring early was mostly an accident for me since working my butt off and being careful with spending was all it took. I didn’t meant to do it- it certainly was never a goal.
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bertilak
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Re: Hit my "number" (I think)...now what?

Post by bertilak »

Don't know if it's been mentioned earlier, but one thing you might have missed is variability of returns (std. deviation, volatility, or some such number).

If you have X dollars should you only count on that being effectively X-Y where Y represents bad luck. For example, if your calculated number is $1 million perhaps you should only credit that for being $0.8 million, lopping off 20% to account for bad markets. This relates to sequence of returns risk and there are certainly more appropriate ways to account for it. But however it is done it will represent a need for something more than a quick back-of-the-envelope calculation comes up with.

In other words be sure you have built in some risk.
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William Million
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Re: Hit my "number" (I think)...now what?

Post by William Million »

Candor wrote: Thu Jun 17, 2021 9:03 am Some on this board, as demonstrated in this thread, let fear dictate their life. Ignore the ultra-conservative as noise. By all reasonable accounts you are in great shape so don't let the irrational fears of others sway you.
Dropping below 3.5% SWR for any normal retiree is ultraconservative.

Below 2% SWR due to worry about running out of money (not, of course, for those focused on inheritance to family/charity/etc) suggests clinical anxiety disorder. Might be more pressing issues to resolve than a SWR discussion can address.

At 0% return, 2% SWR would last 50 years - 1.5% would last 67 years (leaving out inflation). Add in some modest returns and you could draw down savings for over a century of retirement.
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vanbogle59
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Re: Hit my "number" (I think)...now what?

Post by vanbogle59 »

William Million wrote: Thu Jun 17, 2021 10:07 am Below 2% SWR due to worry about running out of money ... suggests clinical anxiety disorder.
LOL. Maybe.

I think it's just a likely to point out the limitations of the "math". And some people's desires to make every decision based on math.
In the end, how long your savings will last is NOT a math problem. At least not SIMPLY a math problem.
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Re: Hit my "number" (I think)...now what?

Post by Marseille07 »

Wanderingwheelz wrote: Thu Jun 17, 2021 9:23 am
Marseille07 wrote: Thu Jun 17, 2021 8:52 am
Wanderingwheelz wrote: Thu Jun 17, 2021 8:33 am For what it’s worth, I recent quit paid work and I use 3% for our planning when it’s time for us to withdrawal. DW is still earning, so no withdrawals until she decides she’s had enough.

3.3MM was my “number” (home equity excluded) figuring $100,000/yr in a hypothetical retirement was enough to squeak by on since we spend only a fraction of that now, even accounting for pricey health insurance DWs biz pays for. Even if there is an odd year now and then where spending goes higher, I wouldn’t sweat it, since there’s a huge gap between 3% and 4% once you get to a certain size nest egg. In reality, most years will be below 3% because that’s how most of us got to the point where we are. People don’t change.
How much LTCG do you expect to pay? I don't think 3.3M@3% would let you spend 100K/year.
There won’t be much LTCG to pay at all. Dividends are a huge part of income for us and will be even more so by the time DW hangs it up, which could be awhile since she loves her biz and is several years younger than me. She will either sell her business or liquidate it for cash which will also provide us a nice cushion of several years of retirement spending- perhaps as many as 10. I don’t count the value of her business in any of our retirement planning, but it’s worth what it’s worth someday down the road and with Amazon and all of the other bloodthirsty competitors who knows what that will be. It’s a guess. It’s not much different than guessing an inheritance.

You can work up a 3% SWR rate on whatever size nest egg you want to to get your withdrawal where you need yours to be. I did ours the way I did ours. Nobody has the same needs or plan as my wife and I, I suspect. The very rough math of the 4% rule is $40,000 per $1,000,000 and the very rough math of the 3% rule would be $30,000 per $1,000,000, so that’s $90,000 per $3,000,000 and add another $10,000 for the $300,000, which gives me $100,000/yr on the back of the envelope. Nothing here is something we’re going to sit through a math class over since it’s very basic. It’s all just a place to start and then take life as it comes and then make adjustments as needed. Retiring early was mostly an accident for me since working my butt off and being careful with spending was all it took. I didn’t meant to do it- it certainly was never a goal.
Thank you. I think you saved me half a million! I had accounted for 15% LTCG but it doesn't appear it'll go anywhere near that.
Last edited by Marseille07 on Thu Jun 17, 2021 11:09 am, edited 3 times in total.
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Re: Hit my "number" (I think)...now what?

Post by HomerJ »

RubyTuesday wrote: Thu Jun 17, 2021 6:15 am But generally for others with 40-50 years of retirement, IMO 3% isn’t all that conservative.
(Since we're just talking opinions), in my opinion 3% is very conservative, no matter how long one has left.
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novolog
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Re: Hit my "number" (I think)...now what?

Post by novolog »

surfstar wrote: Wed Jun 16, 2021 1:13 pm
novolog wrote: Wed Jun 16, 2021 12:20 pm
RubyTuesday wrote: Wed Jun 16, 2021 11:10 am In today’s low-yield environment, 3% is not really all that conservative.
agreed - should aim for 1.5% w/d rate
-2% FTW
Can't be too safe, with SWR!!!

:oops:
had not considered the merits of moving to a negative SWR, but this might be the right path for anyone who wants a truly conservative approach to withdrawals
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Re: Hit my "number" (I think)...now what?

Post by flyingaway »

Negative SWRs just means to keep working on your job.
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Re: Hit my "number" (I think)...now what?

Post by audioengr »

RubyTuesday wrote: Thu Jun 17, 2021 5:35 am
Ramjet wrote: Wed Jun 16, 2021 11:59 am
RubyTuesday wrote: Wed Jun 16, 2021 11:10 am In today’s low-yield environment, 3% is not really all that conservative
A 3% withdrawal rate means that you can withdrawal 3% of assets every year for the next 33 years without ANY portfolio growth whatsoever. This is the definition of conservative
OP is 47. 33 years is not nearly long enough. 30 year TIPs negative real yield.
Will 3% work for early retirement and long life? Maybe. “Conservative” is a continuum, and 3% in today’s low yield environment is not all that conservative for 40-50 years.
I guess you're assuming the OP will be 100% Bonds/TIPs going forward? Otherwise nearly any asset allocation carries them forward.
OP's minimum spend number is about 66% of what is budgeted. Plus Social Security at some point, this is a very conservative rate for 40-50 years.

As quoted below, "Remember: my worst case scenario is everyone else's everyday scenario: I go back to work"
https://fi180.com/2017/10/04/replacing- ... exibility/
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