Surprised that I'm close to FIRE - Need Reality Check

[tealduck]

Hey Mustachians,

Really hoping folks can provide me with some insight, reality check, even a face punch to kick off the labor day weekend! 

I’m not putting out a full case study but I’ll provide important details


Who we be: DW and I are both 55 yrs old, no kids, and we’re renting.
Annual Expenses: 68,400 (37% of this is discretionary spending)
Healthcare: “Individual market” insurance premium: $200/month (included in above expenses)
Stache: $1.39m (tIRA’s = 900K, after-tax brokerage 439K)
Social Security: In today’s dollars our benefit at age 70 will be $60,000 (@100%) and $47,000 (@ 79%)
Moves we’ll make: Roth IRA conversion ladder (thank you mad fientist) which can be funded up to deductions/exemptions for next five years.
Firecalc: even with social security numbers firecalc shows 97% success rate for retirement of 30 years, if I stretch to living to 100 it’s shows 93% success.  I’ve run firecalc assuming constant spending. 

We’re still very capable of side gigs if needed.  I’m just a bit surprised sometimes (pinch myself moment) that we’re actually close.  Not sure if that makes sense to others but we’ve spent our life heads down working hard and feel good that this is even a contemplation at this time in life. 

Thanks for any input!

[Playing with Fire UK]

1) $68k is a LOT of spending. I'd wager that there are some fairly low-pain cuts you could make if you wanted to.

2) You have a stache to support it. Especially if you are willing to cut down on discretionary spending in market downturns.

3) When you say "constant spending" are you accounting for any inflation there?

Yep, you're close, I'd go for it if I was in your shoes.

[tealduck]

Thanks, Playing w/FIRE UK.  Yes, there is fat to be cut if needed.  In Firecalc I used a 3% inflation rate. Sincerely appreciate your comments.  Cheers!

[LifeHappens]

The numbers you've shared look good. I personally would jump at a 97% success ratio.

You might benefit from listing out all your safety margins. For example a) you're renting, so it's possible to move to a lower cost rental b) you can find side gigs earning $XXX c) you can cut ??? from your typical expenses if the market is down.

[tealduck]

Thanks for your comments and suggestions, LifeHappens!  I read your journal and one area we can cut is restaurants, coffee shops, etc.  Seems like we may share that pleasure. 

[coaster831]

Are those Social Security numbers definitely right?  I thought the maximum annual benefit was about $42k / year if you start taking at age 70.

[tealduck]

Hi Coaster831, thanks for question.  Those social security benefit numbers are the sum of what my wife will get at age 70 PLUS what i'll receive at age 70.   

[robartsd]

I'd FIRE with those numbers, no question.

[tealduck]

robartsd - appreciate you giving my numbers a look and the vote of confidence...I know our current expenses at 68K annually aren't very mustachian and we need to tighten the vice on some expense categories, no doubt.  But getting to this point is feeling very liberating:)

[Playing with Fire UK]

robartsd - appreciate you giving my numbers a look and the vote of confidence...I know our current expenses at 68K annually aren't very mustachian and we need to tighten the vice on some expense categories, no doubt.  But getting to this point is feeling very liberating:)

You don't really need to reduce your spending, you just have an opportunity to reduce your day-to-day spending and either buy a bit more cushion in a market down turn, some extra security, or something else (giving, legacy, etc).

If you'd cut down on the spending earlier, you'd have been able to FIRE on less, but now that you have the stache to support it and know that you have costs you can reduce, you shouldn't wait to finish work unless it brings you joy.

[SolarCat]

I hope to be in your shoes at that point in my life! I am also aiming for ~1.3 million 'stache at 55!
Which I think will make retirement possible for us too, even at a 70k spend rate (our actual spend rate right now is closer to 40k, but we want to ramp up on luxury a little in retirement) if we include pensions and social security!

I think I'd also make the transition now if I were you. A good life to be had ahead.

[happy]

Don't work too much longer, you can't get that time back.

[Lobo]

I don't see any mention of retirement funds - Pension, 401k, 403b, etc.  I'm assuming your still working.  Have you left anything out here?

[Rubic]

Healthcare: “Individual market” insurance premium: $200/month (included in above expenses)

How is it that you can get your insurance premiums down this low at age 55?  I'm not
doubting it, just curious what kind of plan you can get for this rate.  Thanks.

[tealduck]

robartsd - appreciate you giving my numbers a look and the vote of confidence...I know our current expenses at 68K annually aren't very mustachian and we need to tighten the vice on some expense categories, no doubt.  But getting to this point is feeling very liberating:)

You don't really need to reduce your spending, you just have an opportunity to reduce your day-to-day spending and either buy a bit more cushion in a market down turn, some extra security, or something else (giving, legacy, etc).

If you'd cut down on the spending earlier, you'd have been able to FIRE on less, but now that you have the stache to support it and know that you have costs you can reduce, you shouldn't wait to finish work unless it brings you joy.

Thanks Playing with Fire UK!  The market has been good in recent years and therefore my DW and myself enter this period with a cautious eye on "sequence of returns".  So, continuing to trim around edges of spending to add a buffer zone to our nest egg is on our mind.   

[tealduck]

Healthcare: “Individual market” insurance premium: $200/month (included in above expenses)

How is it that you can get your insurance premiums down this low at age 55?  I'm not
doubting it, just curious what kind of plan you can get for this rate.  Thanks.

Rubic - DW and run our own business for a number of years.  Last year we started shutting down the business and taking fewer clients and making less money.  But, we're still in the individual health market as business owners.  So, today our monthly premium of $200 is a combination of being the the individual market within the ACA health plan BUT having a lower MAGI and therefore a portion of the premium is shared by government.

Additonal note on this - it's a high deductible plan so our out of pocket costs are roughly $4.5K annually before insurance plan begins to assist.

[tealduck]

Solarcat, Happy & Lobo.  Appreciate the input:)

[RedwoodDreams]

Sure looks like you're "there." For those of us in the U.S. in this age range especially, health care costs are the monkey wrench, but given that it looks like you could, in theory, live on mostly just the SS alone (at age 70), in a way, you really only need to make it 15 years on that giant stash. Shouldn't be a problem, I wouldn't think.

Out of curiosity, have you checked out what your ACA payments would be at the 68k income level? Personally, I'd want a ballpark estimate. It seems ACA options are stronger/better in some states (?), so maybe also have that info in your toolkit, as an option (to move if necessary).

You'll be eligible for Medicare in another 10 years as well, so even if health ins costs increase significantly, that's only temporary.

Lastly, as someone roughly the same age as you who was previously healthy her entire life, clobbered with sudden chronic illness a few years ago (and that greatly diminishes my energy level and ability to do all the things I want to do...), I say: Life is short. You've worked hard to get to where you are now. Go do whatever you two want to do every day and enjoy! You did the work to get here. Congrats!

[tealduck]

Sure looks like you're "there." For those of us in the U.S. in this age range especially, health care costs are the monkey wrench, but given that it looks like you could, in theory, live on mostly just the SS alone (at age 70), in a way, you really only need to make it 15 years on that giant stash. Shouldn't be a problem, I wouldn't think.

Out of curiosity, have you checked out what your ACA payments would be at the 68k income level? Personally, I'd want a ballpark estimate. It seems ACA options are stronger/better in some states (?), so maybe also have that info in your toolkit, as an option (to move if necessary).

You'll be eligible for Medicare in another 10 years as well, so even if health ins costs increase significantly, that's only temporary.

Lastly, as someone roughly the same age as you who was previously healthy her entire life, clobbered with sudden chronic illness a few years ago (and that greatly diminishes my energy level and ability to do all the things I want to do...), I say: Life is short. You've worked hard to get to where you are now. Go do whatever you two want to do every day and enjoy! You did the work to get here. Congrats!

Good insight RedwoodDreams...I unfortunately experienced what you're saying. My dad worked very hard all his life and shortly after retiring at age 70 he passed.  It's always stuck in my head, there are no guarantees in the area of health and lifespan.  You can't throw caution to the wind but you need to be aware that life is short.

Regarding ACA payments, 68K income would come in over 400% of poverty level and eliminate all payment sharing.  With income deduction due to funding our HSA we could lower MAGI and get income to approximatly 375% of poverty level and in that case our health care premium would be a monthly expense of $500 roughly.