UPDATE: High-level early retirement plan - What do y'all think?

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Grifin
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UPDATE: High-level early retirement plan - What do y'all think?

Post by Grifin »

Hi again,

I thought I would follow up with the Boglehead community to give an update on our progress towards early retirement and ask for input on how we can pull it off considering our financial situation.

Our original post was in May 2021: viewtopic.php?t=348900

UPDATE:

A little about us :
He: 44, engineer $195k/yr
She: 44, engineer, $90k/yr. She went part-time (30 hrs) in Aug 2022
Kid: 6yo
additional income: We are generously gifted $34k/yr from my parents, which seems to be highly likely to continue. But not included in SWR calcs along with any potential inheritance.

Annual Expenses: In 2022, $84k and in 2023, we are tracking to spend the same. Our expenses went way down when the kid started kindergarten (no more daycare) and the house was paid off in early 2022.

Assets:
Taxable - stocks/bonds/cash: $1.57M
Tax deferred retirement accounts - stocks/bonds: $1.89M
Primary home in San Antonio, TX: $1.1M
Total investible net worth: $3.46M

No debt

Questions:
I am less interested in whether we can retire early, but rather hearing ideas on how to best do it, assuming annual expenses in retirement to be $110k (adding fluff for some travel and healthcare). We already feel like we live pretty extravagantly at our current spend rate.

1) Up until now, I have considered early retirement planning being achieved in two steps. First, having our taxable accounts fund our lifestyle until 59.5. Then, bankroll the rest of our life with our retirement accounts. So I am simply performing two sequential models (in FireCalc, etc): now to 59.5, then 59.5 - 95 years old. Is this a valid way of looking at it? Am I missing something notable or over-simplifying things?

2) I discussed in my original thread about fear of the unknown and adding copious amounts of buffer to hedge any unforeseen circumstances or misfortune. So I am interested in having a backup plan in case we need to access our retirement accounts before hitting retirement age. I have researched SEPP in the event that risk actually happens. Is this a good backup plan? Do bogleheads see this as an effective tool for this purpose? Or is just taking the 10% penalty more appropriate in this case? This would only play out if we were too stubborn to go get a job or unable to work for some reason.

I really appreciate all the thoughtful banter on this forum. Over the years, I have learned a great deal about more than just personal finance from this community. Thank you all for that.

I'd appreciate any thoughts y'all may have.

Cheers,
Grifin
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quantAndHold
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Re: UPDATE: High-level early retirement plan - What do y'all think?

Post by quantAndHold »

What’s the cost basis of the taxable funds?

I would probably do what you plan, but also do Roth conversions up to the point where you need to pay taxes. Try to reduce your tax rate once you start having to take distributions on the tax advantaged money.
coalcracker
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Re: UPDATE: High-level early retirement plan - What do y'all think?

Post by coalcracker »

I'm the same age as you with similar invested assets and 2 kids.

When I first started investing (before kids), I always imagined I would retire as early as possible and enjoy the fruits of my labor. Now I think it's more likely I will slowly stair-step down to retirement with part time work and maybe eventually 1099 contract type work, while not touching my retirement savings until I decide it's time to pull the plug. Enjoy the ample time off while not stressing about drawing down the nest egg.

When I'm at empty nester at 56 might be a logical time to retire and roam the earth for a while (with my wife) :D
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FiveK
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Re: UPDATE: High-level early retirement plan - What do y'all think?

Post by FiveK »

Grifin wrote: Mon Jun 05, 2023 7:38 pm I am less interested in whether we can retire early, but rather hearing ideas on how to best do it, assuming annual expenses in retirement to be $110k (adding fluff for some travel and healthcare). We already feel like we live pretty extravagantly at our current spend rate.
Your withdrawal rate if you both retired today would be 3.3%, and that ignores both current gift receipts and future Social Security. So yes, you could retire today and be very comfortable.
1) Up until now, I have considered early retirement planning being achieved in two steps. First, having our taxable accounts fund our lifestyle until 59.5. Then, bankroll the rest of our life with our retirement accounts. So I am simply performing two sequential models (in FireCalc, etc): now to 59.5, then 59.5 - 95 years old. Is this a valid way of looking at it? Am I missing something notable or over-simplifying things?
Seems reasonable.
2) I discussed in my original thread about fear of the unknown and adding copious amounts of buffer to hedge any unforeseen circumstances or misfortune. So I am interested in having a backup plan in case we need to access our retirement accounts before hitting retirement age. I have researched SEPP in the event that risk actually happens. Is this a good backup plan? Do bogleheads see this as an effective tool for this purpose? Or is just taking the 10% penalty more appropriate in this case? This would only play out if we were too stubborn to go get a job or unable to work for some reason.
It would be worth considering using taxable dividends/interest/withdrawals for living expenses, while doing Roth conversions to the top of the 12% tax bracket. Five tax years after each conversion, that converted amount may be withdrawn tax and penalty free.

Variations on that theme are certainly possible, but how does that basic strategy look to you?
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Grifin
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Re: UPDATE: High-level early retirement plan - What do y'all think?

Post by Grifin »

coalcracker wrote: Mon Jun 05, 2023 8:08 pm I'm the same age as you with similar invested assets and 2 kids.

When I first started investing (before kids), I always imagined I would retire as early as possible and enjoy the fruits of my labor. Now I think it's more likely I will slowly stair-step down to retirement with part time work and maybe eventually 1099 contract type work, while not touching my retirement savings until I decide it's time to pull the plug. Enjoy the ample time off while not stressing about drawing down the nest egg.

When I'm at empty nester at 56 might be a logical time to retire and roam the earth for a while (with my wife) :D
I feel the same way, however my willingness and ability to take on the perpetual fake drama at work diminishes as our wealth builds. An alternative to our retirement plans may be demoting myself back to an individual contributor engineer job as part of a glide path out of the workforce. CoastFIRE doesn't appeal to me because I imagine the same people drama occurs at Starbucks (coworkers and diva customers) for way less compensation. Then again, I can't necessarily avoid it in an IC engineer position, either. That's the circular argument that I find myself in.
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Grifin
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Re: UPDATE: High-level early retirement plan - What do y'all think?

Post by Grifin »

quantAndHold wrote: Mon Jun 05, 2023 7:49 pm What’s the cost basis of the taxable funds?

I would probably do what you plan, but also do Roth conversions up to the point where you need to pay taxes. Try to reduce your tax rate once you start having to take distributions on the tax advantaged money.
I plan to do this, exactly. :sharebeer
sailaway
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Re: UPDATE: High-level early retirement plan - What do y'all think?

Post by sailaway »

Grifin wrote: Tue Jun 06, 2023 6:44 pm
coalcracker wrote: Mon Jun 05, 2023 8:08 pm I'm the same age as you with similar invested assets and 2 kids.

When I first started investing (before kids), I always imagined I would retire as early as possible and enjoy the fruits of my labor. Now I think it's more likely I will slowly stair-step down to retirement with part time work and maybe eventually 1099 contract type work, while not touching my retirement savings until I decide it's time to pull the plug. Enjoy the ample time off while not stressing about drawing down the nest egg.

When I'm at empty nester at 56 might be a logical time to retire and roam the earth for a while (with my wife) :D
I feel the same way, however my willingness and ability to take on the perpetual fake drama at work diminishes as our wealth builds. An alternative to our retirement plans may be demoting myself back to an individual contributor engineer job as part of a glide path out of the workforce. CoastFIRE doesn't appeal to me because I imagine the same people drama occurs at Starbucks (coworkers and diva customers) for way less compensation. Then again, I can't necessarily avoid it in an IC engineer position, either. That's the circular argument that I find myself in.
Once you are FI, or in any way ready to move on, you can try to negotiate a coasting position as an IC. Probably not recommended if your workplace is actually toxic, but if coworkers are just in your nerves, you can see a lot less of them.
desiderium
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Re: UPDATE: High-level early retirement plan - What do y'all think?

Post by desiderium »

Congratulations on your success with FI
Given your ages and responsibilities, I think there are too many uncertainties to shed your considerable human capital completely. I would suggest cultivating a scheme for maintaining market relevance for a longer-term, e.g. flexible part-time, consulting, non-profit, or teaching role. This may not jell right away, but something to consider.

Good luck.
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Re: UPDATE: High-level early retirement plan - What do y'all think?

Post by vanuber »

Grifin wrote: Tue Jun 06, 2023 6:44 pm ability to take on the perpetual fake drama at work diminishes as our wealth builds. Then again, I can't necessarily avoid it in an IC engineer position, either. That's the circular argument that I find myself in.
Who knew engineers could be so dramatic. Most that I work with wear standard issue striped polos and khakis and drive Toyota Camry's. Any drama comes up around math problems.
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Re: UPDATE: High-level early retirement plan - What do y'all think?

Post by HomerJ »

vanuber wrote: Wed Jun 07, 2023 8:14 am
Grifin wrote: Tue Jun 06, 2023 6:44 pm ability to take on the perpetual fake drama at work diminishes as our wealth builds. Then again, I can't necessarily avoid it in an IC engineer position, either. That's the circular argument that I find myself in.
Who knew engineers could be so dramatic. Most that I work with wear standard issue striped polos and khakis and drive Toyota Camry's. Any drama comes up around math problems.
Managers and arbitrary deadlines and meetings exist everywhere
"The best tools available to us are shovels, not scalpels. Don't get carried away." - vanBogle59
vrr106
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Re: UPDATE: High-level early retirement plan - What do y'all think?

Post by vrr106 »

Grifin wrote: Mon Jun 05, 2023 7:38 pm So I am simply performing two sequential models (in FireCalc, etc): now to 59.5, then 59.5 - 95 years old. Is this a valid way of looking at it?
I personally don't like using 2 models as you describe. If you want to be conservative and look at sequence of returns risks associated with your portfolio, I believe it is better done with one longer model, the shorter the model, the less impact you will probably see due to SORR
"It is not necessary to do extraordinary things to get extraordinary results"-Buffet| "Anytime that something is romanticized, you have to really question whether it exists"-Unknown
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Grifin
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Re: UPDATE: High-level early retirement plan - What do y'all think?

Post by Grifin »

vrr106 wrote: Wed Jun 07, 2023 11:19 am
Grifin wrote: Mon Jun 05, 2023 7:38 pm So I am simply performing two sequential models (in FireCalc, etc): now to 59.5, then 59.5 - 95 years old. Is this a valid way of looking at it?
I personally don't like using 2 models as you describe. If you want to be conservative and look at sequence of returns risks associated with your portfolio, I believe it is better done with one longer model, the shorter the model, the less impact you will probably see due to SORR
I see your point. My rationale is that once we hit retirement age, our retirement account will be more than adequate to last our lifetime even if stopped contributing today. I feel our greater risk lies in the next 15 years trying to live on after tax money solely.

Any ideas in how create one model that considers the two pots of money, after tax now and retirement account later?
steadyosmosis
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Re: UPDATE: High-level early retirement plan - What do y'all think?

Post by steadyosmosis »

Grifin wrote: Mon Jun 05, 2023 7:38 pm Hi again,
...
1) Up until now, I have considered early retirement planning being achieved in two steps. First, having our taxable accounts fund our lifestyle until 59.5. Then, bankroll the rest of our life with our retirement accounts. So I am simply performing two sequential models (in FireCalc, etc): now to 59.5, then 59.5 - 95 years old. Is this a valid way of looking at it? Sounds like a valid way. Am I missing something notable or over-simplifying things? I don't think so.

2) I discussed in my original thread about fear of the unknown and adding copious amounts of buffer to hedge any unforeseen circumstances or misfortune. So I am interested in having a backup plan in case we need to access our retirement accounts before hitting retirement age. I have researched SEPP in the event that risk actually happens. Is this a good backup plan? Probably. Do bogleheads see this as an effective tool for this purpose? One effective tool. Or is just taking the 10% penalty more appropriate in this case? I don't like paying penalties. This would only play out if we were too stubborn to go get a job or unable to work for some reason.
...
I'd appreciate any thoughts y'all may have.
I retired years before age 59.5, but my annual spend rate is closer to 1.5%, than to 3.2%.
Been doing annual Roth conversions since I retired.
If needed, I will spend from Roth, instead of paying 10% penalty to spend from tax-deferred prior to age 59.5.
More info in my signature line below.
Age<59.5. Early-retired. AA ~55/45. Taxable account, Roth IRA, HSA...all are 100% equities. 100% of fixed income is in tIRA. I spend from taxable and re-balance in tIRA.
HeavyChevy
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Re: UPDATE: High-level early retirement plan - What do y'all think?

Post by HeavyChevy »

Health care covered for family for 20ish years? If so, looks doable with your relatively low expenses.
"It's not the best move, but it is a move." - GMHikaru
vrr106
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Re: UPDATE: High-level early retirement plan - What do y'all think?

Post by vrr106 »

Grifin wrote: Wed Jun 07, 2023 1:17 pm
vrr106 wrote: Wed Jun 07, 2023 11:19 am
Grifin wrote: Mon Jun 05, 2023 7:38 pm So I am simply performing two sequential models (in FireCalc, etc): now to 59.5, then 59.5 - 95 years old. Is this a valid way of looking at it?
I personally don't like using 2 models as you describe. If you want to be conservative and look at sequence of returns risks associated with your portfolio, I believe it is better done with one longer model, the shorter the model, the less impact you will probably see due to SORR
I see your point. My rationale is that once we hit retirement age, our retirement account will be more than adequate to last our lifetime even if stopped contributing today. I feel our greater risk lies in the next 15 years trying to live on after tax money solely.

Any ideas in how create one model that considers the two pots of money, after tax now and retirement account later?
Other tools will let you vary your expenses over time, which might give you the result you need. The Retirement Portfolio Model is a spreadsheet linked on this forum that can help. Also, Portfolio Visualizer has a link called Financial Goals that should do the same. And finally cfiresim is a crowdsourced tool that can also do this. Each will obviously require more data input compared with firecalc but I still feel it's better than using 2 separate models
"It is not necessary to do extraordinary things to get extraordinary results"-Buffet| "Anytime that something is romanticized, you have to really question whether it exists"-Unknown
schwank
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Re: UPDATE: High-level early retirement plan - What do y'all think?

Post by schwank »

We are close to OP in age, including child. We are a bit behind OP on taxable as DW did a career change in early 30s and my comp profile changed when i joined FAANG in my late 30s. Then we built a house.

I too would be getting antsy with 30x expenses. I'm instead targeting retirement at the end of elementary school, as I wouldnt see much freedom benefit before that anyways. Maxing everything and will be looking to start a bond ladder to cover the gap to 59.5. I want to be sure but not work longer than I have to. Soi ds lime OP is on the right pathand maube just a little more padding will make you comfoetable to take the leap. Good luck!
barberakb
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Re: UPDATE: High-level early retirement plan - What do y'all think?

Post by barberakb »

HomerJ wrote: Wed Jun 07, 2023 9:10 am
vanuber wrote: Wed Jun 07, 2023 8:14 am
Grifin wrote: Tue Jun 06, 2023 6:44 pm ability to take on the perpetual fake drama at work diminishes as our wealth builds. Then again, I can't necessarily avoid it in an IC engineer position, either. That's the circular argument that I find myself in.
Who knew engineers could be so dramatic. Most that I work with wear standard issue striped polos and khakis and drive Toyota Camry's. Any drama comes up around math problems.
Managers and arbitrary deadlines and meetings exist everywhere
Not in retirement :)
unwitting_gulag
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Re: UPDATE: High-level early retirement plan - What do y'all think?

Post by unwitting_gulag »

One consideration for the OP is whether his career accords a creative, intellectual outlet... a chance to do archival things. By this I mean that some engineers do research, present papers at technical conferences, write articles for peer-reviewed journals, file patent applications and the like. Such work can be done to some extent in "emeritus" status, which is to say semi-retired... but only to some extent. If one is a team-leader with a set of journeymen engineers who run apparatus or do computations or whatnot, then losing such team - as a retiree - renders it much harder to keep writing papers.

So, if the OP is in such an archival-creative field, then retiring early may mean crimping one's creative leads early. This is a negative, even if one has plenty of money and no qualms about SWR or funding child's education or long-term-care coverage or whatever else. But if such professional creativity isn't such a consideration - so, one is well-remunerated and senior in the office, but ultimately doing humdrum rote things - then indeed, the self-dispensation to retire early, is much easier.
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Grifin
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Re: UPDATE: High-level early retirement plan - What do y'all think?

Post by Grifin »

Thanks for the responses.

I can't imagine both us quitting at the same time. We will ultimately ease out of the workforce. First, the wife will retire completely as soon as late Summer. I will attempt to hold out. Work is not toxic, but in my 20 years in the workforce post graduation, I have become less patient with the people component in the exec and middle management ranks. Downshifting is definitely an option, but I'd like to plan for not having to work so there isn't pressure to 'find another job,' rather take on opportunities as they present themselves.
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Grifin
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Re: UPDATE: High-level early retirement plan - What do y'all think?

Post by Grifin »

vrr106 wrote: Wed Jun 07, 2023 3:05 pm
Grifin wrote: Wed Jun 07, 2023 1:17 pm
vrr106 wrote: Wed Jun 07, 2023 11:19 am
Grifin wrote: Mon Jun 05, 2023 7:38 pm So I am simply performing two sequential models (in FireCalc, etc): now to 59.5, then 59.5 - 95 years old. Is this a valid way of looking at it?
I personally don't like using 2 models as you describe. If you want to be conservative and look at sequence of returns risks associated with your portfolio, I believe it is better done with one longer model, the shorter the model, the less impact you will probably see due to SORR
I see your point. My rationale is that once we hit retirement age, our retirement account will be more than adequate to last our lifetime even if stopped contributing today. I feel our greater risk lies in the next 15 years trying to live on after tax money solely.

Any ideas in how create one model that considers the two pots of money, after tax now and retirement account later?
Other tools will let you vary your expenses over time, which might give you the result you need. The Retirement Portfolio Model is a spreadsheet linked on this forum that can help. Also, Portfolio Visualizer has a link called Financial Goals that should do the same. And finally cfiresim is a crowdsourced tool that can also do this. Each will obviously require more data input compared with firecalc but I still feel it's better than using 2 separate models
Thanks for the suggestions. I'll check them out.

grifin
Wannaretireearly
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Re: UPDATE: High-level early retirement plan - What do y'all think?

Post by Wannaretireearly »

Grifin wrote: Mon Jun 05, 2023 7:38 pm Hi again,

I thought I would follow up with the Boglehead community to give an update on our progress towards early retirement and ask for input on how we can pull it off considering our financial situation.

Our original post was in May 2021: viewtopic.php?t=348900

UPDATE:

A little about us :
He: 44, engineer $195k/yr
She: 44, engineer, $90k/yr. She went part-time (30 hrs) in Aug 2022
Kid: 6yo
additional income: We are generously gifted $34k/yr from my parents, which seems to be highly likely to continue. But not included in SWR calcs along with any potential inheritance.

Annual Expenses: In 2022, $84k and in 2023, we are tracking to spend the same. Our expenses went way down when the kid started kindergarten (no more daycare) and the house was paid off in early 2022.

Assets:
Taxable - stocks/bonds/cash: $1.57M
Tax deferred retirement accounts - stocks/bonds: $1.89M
Primary home in San Antonio, TX: $1.1M
Total investible net worth: $3.46M

No debt

Questions:
I am less interested in whether we can retire early, but rather hearing ideas on how to best do it, assuming annual expenses in retirement to be $110k (adding fluff for some travel and healthcare). We already feel like we live pretty extravagantly at our current spend rate.

1) Up until now, I have considered early retirement planning being achieved in two steps. First, having our taxable accounts fund our lifestyle until 59.5. Then, bankroll the rest of our life with our retirement accounts. So I am simply performing two sequential models (in FireCalc, etc): now to 59.5, then 59.5 - 95 years old. Is this a valid way of looking at it? Am I missing something notable or over-simplifying things?

2) I discussed in my original thread about fear of the unknown and adding copious amounts of buffer to hedge any unforeseen circumstances or misfortune. So I am interested in having a backup plan in case we need to access our retirement accounts before hitting retirement age. I have researched SEPP in the event that risk actually happens. Is this a good backup plan? Do bogleheads see this as an effective tool for this purpose? Or is just taking the 10% penalty more appropriate in this case? This would only play out if we were too stubborn to go get a job or unable to work for some reason.

I really appreciate all the thoughtful banter on this forum. Over the years, I have learned a great deal about more than just personal finance from this community. Thank you all for that.

I'd appreciate any thoughts y'all may have.

Cheers,
Grifin
I think you’ve done fantastic, and are doing fantastic!
We’re also mid 40s and have slightly less liquid nw, but def higher current expenses. My theory is until my two kids are thru high school, I’m schedule and location bound. So, I’ll keep on saving until I’m 50 which nicely lined up with my youngest graduating HS. Plus there seems a respectable air of acceptance at 50 for early retirement, at least around here ;)

In the meantime we’re spending loads on vacations. But truly worth it for us. Just left Tunisia and cruising into Sicily 😎

My advice is spend some dough on whatever you enjoy today. The retirement finish line is ready for you financially.
“At some point you are trading time you will never get back for money you will never spend.“ | “How do you want to spend the best remaining year of your life?“
BanquetBeer
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Re: UPDATE: High-level early retirement plan - What do y'all think?

Post by BanquetBeer »

Md 30's but same/identical path.

My goal is to work a bit more until we have enough to comfortably survive a divorce - retiring at 45 means you got another ~45 years - lots of unknowns could happen. (also because I am younger I have ~55 years from now, longer than I have been alive so the future is uncertain). If we stay together it just ends up as business class family vacations to Europe with our adult kids?


My plan is to try to work my last 2 years in a full remote position as an IC. No drama/interaction with office staff. Just call up field personnel, take a few trips, deal with contractors. Currently working hybrid schedule and it has been eye opening how relaxed it is just to get your work done in casual clothes and not worry about looking busy when you finish for the day.

Your plan looks fine, I wouldn't bother splitting into 2 buckets - unnecessary complication. Answer me this - if you run out of taxable money at 57, do you plan on going homeless until you hit 59.5? I suspect you would find a way to take money out of retirement... so my advice is:
  • Does your $110k include health insurance for the family?
  • Are you willing to reallocate your spending as your kid gets older? (less adult spending and more kid spending).
  • Do you have things that will keep you occupied or that you want to do frequently? (I want to live near the woods and go
    on daily walks, double my work outs, and cook more meals vs panicky tossing stuff together after work. I also want to camp/travel more but I think you need to be realistic that if you did that all the time, being on the road would be draining).
So figure out your spending rate including all things (like health insurance). Figure out how you will get that money - what your tax rate will be so you can add taxes. Run current assets with your before tax withdrawals and see how it does.

My plan is backwards, I don't spend much so I am just looking to take ~3.5% withdrawals and live on that. Anywhere near my target will be sufficient for me and the difference is likely gifting to adult kids. I am aiming for luxury cars but won't be upset if I have to drive a corolla.
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Grifin
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Re: UPDATE: High-level early retirement plan - What do y'all think?

Post by Grifin »

BanquetBeer wrote: Fri Jun 09, 2023 6:52 am Md 30's but same/identical path.

My goal is to work a bit more until we have enough to comfortably survive a divorce - retiring at 45 means you got another ~45 years - lots of unknowns could happen. (also because I am younger I have ~55 years from now, longer than I have been alive so the future is uncertain). If we stay together it just ends up as business class family vacations to Europe with our adult kids?


My plan is to try to work my last 2 years in a full remote position as an IC. No drama/interaction with office staff. Just call up field personnel, take a few trips, deal with contractors. Currently working hybrid schedule and it has been eye opening how relaxed it is just to get your work done in casual clothes and not worry about looking busy when you finish for the day.

Your plan looks fine, I wouldn't bother splitting into 2 buckets - unnecessary complication. Answer me this - if you run out of taxable money at 57, do you plan on going homeless until you hit 59.5? I suspect you would find a way to take money out of retirement... so my advice is:
  • Does your $110k include health insurance for the family?
  • Are you willing to reallocate your spending as your kid gets older? (less adult spending and more kid spending).
  • Do you have things that will keep you occupied or that you want to do frequently? (I want to live near the woods and go
    on daily walks, double my work outs, and cook more meals vs panicky tossing stuff together after work. I also want to camp/travel more but I think you need to be realistic that if you did that all the time, being on the road would be draining).
So figure out your spending rate including all things (like health insurance). Figure out how you will get that money - what your tax rate will be so you can add taxes. Run current assets with your before tax withdrawals and see how it does.

My plan is backwards, I don't spend much so I am just looking to take ~3.5% withdrawals and live on that. Anywhere near my target will be sufficient for me and the difference is likely gifting to adult kids. I am aiming for luxury cars but won't be upset if I have to drive a corolla.
  • Does your $110k include health insurance for the family?
Yes, our current expenses are $85k, I've added $25k for insurance and a little more travel
  • Are you willing to reallocate your spending as your kid gets older? (less adult spending and more kid spending).
In some ways, yes. But I don't think this balance would sway all that much. Kids are expensive all the way around; infant to teenage years
  • Do you have things that will keep you occupied or that you want to do frequently? (I want to live near the woods and go
    on daily walks, double my work outs, and cook more meals vs panicky tossing stuff together after work. I also want to camp/travel more but I think you need to be realistic that if you did that all the time, being on the road would be draining).
Or course! I could fill up my days rather easily. And my hobbies are cheap for the most part.


One key point to make is that we will scale out of work. And I would consider working again some day, but on my own terms. We wouldn't ride our SWR off a cliff. In good times, we may splurge a bit more, and tighten up during the rough times.
yoga
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Re: UPDATE: High-level early retirement plan - What do y'all think?

Post by yoga »

I saw in the Retirement Class your wife pulled the plug. I think that's excellent and congrats to you and your family!!

I'm curious, would you still have the same confidence with your plan if you didn't have the safety net of the yearly gifts? I understand you aren't counting them in your projections, but in some way I assume it's in the back of your mind. Also, reasonable to assume your parents are well off and could theoretically leave you a sizable inheritance.
Topic Author
Grifin
Posts: 42
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Location: SATX

Re: UPDATE: High-level early retirement plan - What do y'all think?

Post by Grifin »

Hi yoga,

Ms. Grifin appreciates the well wishes.

She was ready to retire and there was no reason for her to continue working. I’d say the fact that I plan to work for at least a couple more years was the primary rationalization for action. We can live on my salary and still continue to save a good bit. Adding to the case, we can buy some time before completely severing the salary and corporate health insurance safety nets. The gifting and future inheritance add comfort but do not play into our decision-making.

Cheers
Grifin
yoga
Posts: 169
Joined: Wed Apr 29, 2015 5:13 am

Re: UPDATE: High-level early retirement plan - What do y'all think?

Post by yoga »

Grifin wrote: Wed Aug 30, 2023 9:13 pm Hi yoga,

Ms. Grifin appreciates the well wishes.

She was ready to retire and there was no reason for her to continue working. I’d say the fact that I plan to work for at least a couple more years was the primary rationalization for action. We can live on my salary and still continue to save a good bit. Adding to the case, we can buy some time before completely severing the salary and corporate health insurance safety nets. The gifting and future inheritance add comfort but do not play into our decision-making.

Cheers
Grifin
Thank you, I appreciate the response. We're a couple years younger, with two middle school aged kids. Things get more hectic every year and I find myself constantly questioning if the two person working lifestyle is worth it. I'm finding it hard to just call it quits and I feel like I'm just waiting for that big thing or sign that's there telling me it's ok.
Wannaretireearly
Posts: 4881
Joined: Wed Mar 31, 2010 4:39 pm

Re: UPDATE: High-level early retirement plan - What do y'all think?

Post by Wannaretireearly »

Hi grifin, saw your post on the retirement thread. Hearty congrats on your retirement! Curious do you have anything planned for the rest of the year? Perhaps not, which is 100% fine in my book!

Well done & please keep us updated, we learn a lot from early retirees like you. Financial and non-financial aspects.

:sharebeer
“At some point you are trading time you will never get back for money you will never spend.“ | “How do you want to spend the best remaining year of your life?“
4nursebee
Posts: 2664
Joined: Sun Apr 01, 2012 7:56 am
Location: US

Re: UPDATE: High-level early retirement plan - What do y'all think?

Post by 4nursebee »

Grifin wrote: Mon Jun 05, 2023 7:38 pm Hi again,

I thought I would follow up with the Boglehead community to give an update on our progress towards early retirement and ask for input on how we can pull it off considering our financial situation.

Our original post was in May 2021: viewtopic.php?t=348900

UPDATE:

A little about us :
He: 44, engineer $195k/yr
She: 44, engineer, $90k/yr. She went part-time (30 hrs) in Aug 2022
Kid: 6yo
additional income: We are generously gifted $34k/yr from my parents, which seems to be highly likely to continue. But not included in SWR calcs along with any potential inheritance.

Annual Expenses: In 2022, $84k and in 2023, we are tracking to spend the same. Our expenses went way down when the kid started kindergarten (no more daycare) and the house was paid off in early 2022.

Assets:
Taxable - stocks/bonds/cash: $1.57M
Tax deferred retirement accounts - stocks/bonds: $1.89M
Primary home in San Antonio, TX: $1.1M
Total investible net worth: $3.46M

No debt

Questions:
I am less interested in whether we can retire early, but rather hearing ideas on how to best do it, assuming annual expenses in retirement to be $110k (adding fluff for some travel and healthcare). We already feel like we live pretty extravagantly at our current spend rate.

1) Up until now, I have considered early retirement planning being achieved in two steps. First, having our taxable accounts fund our lifestyle until 59.5. Then, bankroll the rest of our life with our retirement accounts. So I am simply performing two sequential models (in FireCalc, etc): now to 59.5, then 59.5 - 95 years old. Is this a valid way of looking at it? Am I missing something notable or over-simplifying things?

2) I discussed in my original thread about fear of the unknown and adding copious amounts of buffer to hedge any unforeseen circumstances or misfortune. So I am interested in having a backup plan in case we need to access our retirement accounts before hitting retirement age. I have researched SEPP in the event that risk actually happens. Is this a good backup plan? Do bogleheads see this as an effective tool for this purpose? Or is just taking the 10% penalty more appropriate in this case? This would only play out if we were too stubborn to go get a job or unable to work for some reason.

I really appreciate all the thoughtful banter on this forum. Over the years, I have learned a great deal about more than just personal finance from this community. Thank you all for that.

I'd appreciate any thoughts y'all may have.

Cheers,
Grifin
My math says you have 30X so might can retire now. If you can get pension or SS it makes it even easier.
Perhaps analyze when you both have enough working years for social security near maximization.
Your tax deferred accounts might grow enough to make RMDs at 70 change your tax situation. I would not get hung up on things now, just be aware it might be easy to pull some out earlier than 70.
Fear of unknown a legit fear for us. Pulling an initial chunk out of IRA/401K to purchase an annuity to carry us to age 70 max social security helped. Now a 2nd annuity to meet all base expenses helps more. Works a bit like SEPP. Still have a lot in tax deferred and Roths.

I think you are getting too into the nitty gritty too far away from retirement. Chill out.

I'd advocate learning about withdrawal methods and decide which one makes sense for you. Initially we chose VPW with 2 yr emergency fund to handle down years. https://www.bogleheads.org/wiki/Withdrawal_methods

You have plenty and money coming in. Why not push up the return with maximum stocks?

You might have too much. What about in 15 years if you have double, triple, or more money? Say you end up with 10M and your plan calls for spending/withdrawing 5% in a high stock VPW portfolio (5% is about where we are at) That will be 500,000 per year. Do you really picture spending that much then? Why not spend it now, or spend more of it now? I bet you never have to save another dime.

I say add more fluff now and later.

Good work!
Pale Blue Dot
Topic Author
Grifin
Posts: 42
Joined: Wed Apr 22, 2020 9:30 pm
Location: SATX

Re: UPDATE: High-level early retirement plan - What do y'all think?

Post by Grifin »

Wannaretireearly wrote: Fri Mar 01, 2024 12:13 am Hi grifin, saw your post on the retirement thread. Hearty congrats on your retirement! Curious do you have anything planned for the rest of the year? Perhaps not, which is 100% fine in my book!

Well done & please keep us updated, we learn a lot from early retirees like you. Financial and non-financial aspects.

:sharebeer
Thanks! I am focusing now on recovering from the effects of my stressful job. So far, I am in a better frame of mind. My focus for the next 6 months is to connect with friends and family, exercise, work on the list of things I've put off, and learn new things. During that time, I plan to find what's next in my life. It might be full on retirement, or maybe another career endeavor on my terms. For now, I am savoring the freedom.

Cheers, Grifin
Topic Author
Grifin
Posts: 42
Joined: Wed Apr 22, 2020 9:30 pm
Location: SATX

Re: UPDATE: High-level early retirement plan - What do y'all think?

Post by Grifin »

4nursebee wrote: Fri Mar 01, 2024 3:29 am

My math says you have 30X so might can retire now. If you can get pension or SS it makes it even easier.
Perhaps analyze when you both have enough working years for social security near maximization.
Your tax deferred accounts might grow enough to make RMDs at 70 change your tax situation. I would not get hung up on things now, just be aware it might be easy to pull some out earlier than 70.
Fear of unknown a legit fear for us. Pulling an initial chunk out of IRA/401K to purchase an annuity to carry us to age 70 max social security helped. Now a 2nd annuity to meet all base expenses helps more. Works a bit like SEPP. Still have a lot in tax deferred and Roths.

I think you are getting too into the nitty gritty too far away from retirement. Chill out.

I'd advocate learning about withdrawal methods and decide which one makes sense for you. Initially we chose VPW with 2 yr emergency fund to handle down years. https://www.bogleheads.org/wiki/Withdrawal_methods

You have plenty and money coming in. Why not push up the return with maximum stocks?

You might have too much. What about in 15 years if you have double, triple, or more money? Say you end up with 10M and your plan calls for spending/withdrawing 5% in a high stock VPW portfolio (5% is about where we are at) That will be 500,000 per year. Do you really picture spending that much then? Why not spend it now, or spend more of it now? I bet you never have to save another dime.

I say add more fluff now and later.

Good work!
Thanks 4nursebee. I appreciate your perspective.

The recent massive run has gotten me over the hurdle of taking the plunge. Feb 16 was my last day at work, and Ms Grifin is already retired.
Wannaretireearly
Posts: 4881
Joined: Wed Mar 31, 2010 4:39 pm

Re: UPDATE: High-level early retirement plan - What do y'all think?

Post by Wannaretireearly »

Grifin wrote: Fri Mar 01, 2024 9:25 am
Wannaretireearly wrote: Fri Mar 01, 2024 12:13 am Hi grifin, saw your post on the retirement thread. Hearty congrats on your retirement! Curious do you have anything planned for the rest of the year? Perhaps not, which is 100% fine in my book!

Well done & please keep us updated, we learn a lot from early retirees like you. Financial and non-financial aspects.

:sharebeer
Thanks! I am focusing now on recovering from the effects of my stressful job. So far, I am in a better frame of mind. My focus for the next 6 months is to connect with friends and family, exercise, work on the list of things I've put off, and learn new things. During that time, I plan to find what's next in my life. It might be full on retirement, or maybe another career endeavor on my terms. For now, I am savoring the freedom.

Cheers, Grifin
Excellent plan. Nothing like not having work stress imo. Deep breaths…
“At some point you are trading time you will never get back for money you will never spend.“ | “How do you want to spend the best remaining year of your life?“
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