Was prompted to post a case study based on an earlier post on Ask a Mustachian (
https://forum.mrmoneymustache.com/ask-a-mustachian/a-cure-for-last-mile-itis/), so here goes….
Male 54, DW 52, DS 17yo. British ex-pat, living in US, HCOL (Boston). Filing Jointly, Sole earner (DW is stay-at-home Mom and has minimal savings or SS). Both in good health at present
Working
@Mega-corp; stressed and pretty burnt out, looking to get out soon; I'm close to my numbers, but last mile of working career proving tough for me.
TNW $2.75M currently (Full details below). 'Plan A' is to sell up and move to LCOL area on retirement (somewhere warmer, NC,SC,VA,FL perhaps); After house purchase of 650k (expensive because I'd love a water view) and 200k college for DS, leaves $1.9M effective net worth. FIREcalc says I need $2.4M for a 96% probability of covering estimated retirement expenses of $96k PA for 35 years (I'm including assumed SS of 18k PA from age 70).
At current savings rate & 6% assumed growth; I should hit these numbers in December 2019. Broadly, I’m trying to decide if I should hang in until then, or rationalize my planned retirement expenses and get out earlier with my sanity mostly intact (end of this year would make sense, once I turn 55 in December, company benefits will then cover a big chunk of future healthcare costs).
I know my expenses are high, they're broadly based on current spend, with some adjustments. What do you think I can reel in (without getting too frugal as this probably won't suit us)? Did I miss something anything in my other assessments that would need a rethink for better or worse?
Thanks for any inputsFull details:TNW $2.75M; Effective NW: $1.9m (Deducted 650k to purchase house in LCOL area in retirement, deduct 200k College Costs). Anticipate 18k PA ‘Social Security’ from age 70 (combined UK State pension and US SS Benefits)
Income: $390k pre-tax (290k including bonus, plus share allocation of 100k)
Savings per annum: $225k -$66k: Pre-tax contributions (company has a ‘supplementary savings plan’, so after I max out my 401k, pre-tax investments switch to the supplementary plan)
-$30k: After-tax contributions (initially to 401k, Rolled annually to Roth via Mega Backdoor)
-$41k: Company Match Plus Pension Contribution
-$82k: After Tax annual share vesting (moved to investment account)
-$6.5k: After Tax Backdoor Roth
Current Net Worth $2,750,000: -$640,000 Post Tax accounts
-$1,270,000 401k (includes $500k in UK ‘401k equivalent’ SIPP)
-$450,000 Company Stock & Options
-$160,000 Roth IRA (via Backdoor & Mega Backdoor)
-$230,000 Home Equity
Investment approach - 90% Low Cost Vanguard index funds, remainder in niche investment themes (via motif investing). Not big on bonds
LiabilitiesMortgage $500k (25yr remaining on a 30yr mortgage, property value $730k)
Estimated Monthly Expenses in retirement total: $8000 ($96,000 Annually)‘ESSENTIAL’ = $5400 (64k PA)Health Insurance $1,600 (company supported plan If I work ‘til 55)
Property Tax $300
Electricity / Heating $670 (will probably have a pool)
Home Insurance $200
Internet $80
Groceries + non-food consumables $800
Clothing etc. $300
Car Insurance $170
Gas $200
Car (maintenance & depreciation) $400 (always buy used, and will do my own maintenance)
Phone $80
House Maintenance $300 (will do most myself)
Tax on Income $300
NON-ESSENTIAL = $2600Travel $1,500 (we really want to travel a lot in retirement, so this is realistic for early years but will we want to travel extensively every year? )
Restaurants $300
Entertainment $300
Misc. $500 (padding, because I'm sure I've missed things)
Estimated Social Security (at 70) $18,000 pa
Contingency: I have a range of marketable skills that will keep me employable despite my age, and would not be averse to some part time work should the stock market plummet; assume I can earn 50k PA as needed, hence I'm comfortable with 96% in FIRECalc, and a riskier equity-heavy portfolio
Additional Contingency: Could relocate back to the UK, where even lower COL would allow us to drop to $80,000 PA
Yet more contingency: Not averse to thinking about moving overseas and arbitraging income - Mexico, Portugal, Belize, Spain, Malaysia might all be possible, perhaps for 10 year stretch.