At the recommendation of
@spartana , I've started writing out a retirement plan with some specificity. Here is an early draft - comments welcome!
All numbers are in 2018 dollars.
I expect to be laid off next year (2019). With this, severance pay will take me through the end of the year. My wife plans to work at least through the end of 2019.
By the end of 2019, we estimate having $1,250,000 invested, plus a fully paid off condo worth $750,000.
Our investments are 95% total market (VTSAX), and 5% cash. We plan on living off of $68,000/year. Note that $68,000 is 5.44% of $1,250,000.
In 2022, we plan to update our home. While the extent of this is currently undefined, we are planning for $20,000 for this update.
My wife turns 62 in 2025. If our investments have fallen more than 20% (so, below $1,000,000) we’ll elect to take her social security (worth approximately $11,000/year). Otherwise, we’ll continue to defer taking this annually until she turns 70, or our investments fall below $1,000,000.
In 2030, if our investments are below $1,000,000 we will sell our condo with the intent to reduce our cost of living to no more than a 5% withdrawal rate. This may mean renting elsewhere in Seattle, or moving somewhere with a lower cost of living. Otherwise, we plan on staying in the condo as long as our investments exceed $1,000,000.
In 2033, I turn 62. If we sold the condo and our withdrawal rate exceeds 5.5%, I’ll elect to take my social security (worth approximately $17,000/year). Otherwise, we’ll continue to defer taking this annually until turning 70, or we have sold the condo and our withdrawal rate exceed 5.5%.
Plan buffers not included above:
* My wife will probably work longer than end of 2019. Following this job, she is interested in part time work.
* I may do some consulting after retiring. If so, this could provide up to $100,000/year.
* I have collectibles worth approximately $50,000. I plan on selling these in the first calendar year following both of our retirements from work.
* We irregularly receive gifts in excess of $10,000. I would estimate that we’ll receive $50,000 - $100,000 in gifts between 2020 and 2030.
Plan risks include:
*While I have high expectations of being laid off next year, I may need to quit instead. This would eliminate the 6 months of severance (and so I might need to work those additional 6 months).
* Social Security payouts could change. While I am reasonably confident in my wife’s social security, mine is far enough out that there is more risk.
* I am estimating our investments at the end of 2019. With a market downturn, they could be lower than that.