Can I Really Do This??

[firelyve]

Fairly new to the blog/forum, but decided on FIRE officially in May.  However, I've probably been an accidentally pursuing FIRE since working.  So, here goes-can I really DO THIS???

My plan is to retire from my FT job at the end of next year.  With no loss/appreciation of investments from now, but continued contributions, I'll have $1.3MM.  $850k will be in non-retirement, $500k in retirement accounts.  I expect my expenses to be $25,000 for the next 7 years after retiring, $44,000 for 3 years as I'm still contributing to child's college savings, and $39,000 after that.  I'm 46, my wife is 38 (she doesn't want to work either lol), and our youngest is 8. 

I'd like to potentially leave something substantial for the 3 kids when we go.  Like $1MM. 

IF I count on Social Security being there when I turn 67, this should be a no-brainer.  If not, then maybe not so easy.

Maybe it's just fear, but I don't see the market always cooperating on a decent return. Since I started tracking my investments in 2000, the market was essentially 0 return through 2013.  Yes, it's gone up quite a bit since then, but it's still only 5-6% return.  Big concern is that the market is going to get much worse in the short term (1-5 years). 

Am I just being paranoid?  What is making me so fearful??? 

Any advice?

[terran]

You're in the right ballpark at least. Take a look at https://earlyretirementnow.com/safe-withdrawal-rate-series/

Do your planned expenses include taxes (probably minimal)?  Health insurance? Irregular expenses like home maintenance, car replacement, etc?

[firelyve]

thanks, i'll start reading that website.

taxes-0; very little just state taxes to really worry about
health insurance-best guesstimate with subsidies
house repairs, car maintenance, car replacement-check

[Greenback Reproduction Specialist]

Sure looks like you could, if you use the 4% rule as a ball park you should be able to take a withdraw of 52k/yr. Keep reading and learning, for instance, there are steps you can take to protect your principal in a down turn by using like a 2yr cd ladder strategy to buffer against taking a withdraw during a market downturn. You could use your income now to start building that buffer. I could go more in depth if you like, but thats just 1 example, there are tons of good ideas that get floated around here.

[Catbert]

Please confirm that your 850K non-retirement investments doesn't include your house? 

[Altons Bobs]

I'd figure in full price health insurance just in case subsidy is gone completely.

[firelyve]

850k non-retirement does not include house.  That will be paid off when I retire.  I currently have about a $90,000 balance that will be down to $84,000 at end of 2020; 15 years @ 3%.  Otherwise, I'd have $84,000 more in my non-retirement.

I definitely need to look into having something to generate interest on my cash reserves.  I started tracking my investments in 2000, and remember the market going NOWHERE basically from 2000-2013.  Had someone decided to start their retirement at the wrong time, with $1,000,000 at a market peak, and forced to sell, I'd think they'd seriously shorten their chances of their money making it through an extended retirement.  That means I'd like 5x living expenses in cash.  Sound too conservative? Maybe, but that's why I'm here-to learn!

I also think that it's safer to assume 3% withdrawal rate.  My concern is that the stock market will not return as high as the 7-9% historical average I've seen.  I'm guessing more like 5-6% with 2-3% inflation.  I'm guessing that I'll probably have to do some sporadic/PT work in order to be safe.

Insurance has become ridiculous for premiums.  In 2000, I was paying $5 per paycheck bi-weekly for really good coverage for a single man.  Now, I pay $30 per per paycheck for a high deductible plan that covers basically nothing until I hit like several thousands in bills.  I plan on staying healthy.  I can't take that chance with my family, but if I had to add an additional $1000 per month for insurance without subsidies, not sure how to make that work.  Again, that's why I'm here, to learn how to prepare for leaving my FT job.

Thanks all!!