Author Topic: Can I????  (Read 3486 times)

Punxsyboy

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Can I????
« on: August 25, 2014, 03:52:49 PM »
I found the MMM community earlier this year & have been reading & following along since then, and have discovered that I've been fairly Mustachian all my life  :)   I've also noticed that there are number of posters here that are much more intelligent than I, hence, I am posting these  2 queries  for your comments & recommendations.   
Are we ready to FIRE?  If not, can we at least quit saving?

 Expenses:  $16,000 (annual) (This does not include our travel/vacation expenses of an estimated $7000...we like to travel & camp. Nor does it include an anticipated  cost of approx $7000 for health insurance.  Obamacare really messed up my retirement budget as health insurance would have been about $3000 pre ACA.)

Assets:
Traditional & ROTH IRAs: $261k
SEP IRA: $275k
Taxable acct.: $316k  ( earning approx $4k/year in dividends at present, I will change over to mostly dividend stocks after we quit working & our tax rate is lower.  I don't want to pay the cap. gain tax with our current income ).
Cash: $120k  (emergency fund, 3+ years of expenses to allow the market to recover from another recession, and cash for a new to us RV...ok, so I deserve a face punch here).
All investments are in stocks. (approx. 80+ and diversified). 
House is paid for & we are debt free.
Wife & I are 52 & 53,  current income  $120k. 
I know we have too much in retirement accts. & not enough in taxable....hence my uncertainty if we are ready.  At age 60 wife will collect approx $1000/month pension, & I plan on deferring SS until 70 & should receive approx. $2200/ month. 

I think we can stop saving but would like your opinions.  I will still plan on working PT for a while as I think I'm going to have problems cutting the cord of the assured paycheck even if we do have enough so that way we won't have to touch our stash for at least a few years.  Wife will transition to PT or quit if she can't secure PT as of Jan. 2015 and her employer provides our health coverage.

Sorry it's such a long post but wanted to provide all the pertinent information.  If I've forgotten anything just ask.  Thx in advance for your opinions/comments.

Eric

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Re: Can I????
« Reply #1 on: August 25, 2014, 04:25:53 PM »
Expenses:  $16,000 (annual) (This does not include our travel/vacation expenses of an estimated $7000...we like to travel & camp. Nor does it include an anticipated  cost of approx $7000 for health insurance.  Obamacare really messed up my retirement budget as health insurance would have been about $3000 pre ACA.)
You have $30K/yr in spending.  Are you sure the ACA is going to be that expensive?  You're factoring in the subsidies at your new income level, right?  Are you in a state that didn't expand Medicaid and therefore $23K puts you in the small dis-advantageous spot between medicaid and when ACA subsidies kick in?

Either way, for the sake of the math, let's go with $30K.

Assets:
Traditional & ROTH IRAs: $261k
SEP IRA: $275k
Taxable acct.: $316k  ( earning approx $4k/year in dividends at present, I will change over to mostly dividend stocks after we quit working & our tax rate is lower.  I don't want to pay the cap. gain tax with our current income ).
Cash: $120k  (emergency fund, 3+ years of expenses to allow the market to recover from another recession, and cash for a new to us RV...ok, so I deserve a face punch here).

You have $972K in non-house assets.  Using the 4% rule, that stash should be able to support over $38K worth of spending per year, forever.  Using a much more conservative 3% withdrawal, your stash should be able to support $29K in spending per year.  Since your projected retirement spending is only $30K per year, I think even conservatively you have everything covered.  This does not even consider your SS or pensions.  You're FI!  Congrats!

However...
( earning approx $4k/year in dividends at present, I will change over to mostly dividend stocks after we quit working & our tax rate is lower.  I don't want to pay the cap. gain tax with our current income ).

Why would you want to do this?  You'll want diversity, not concentration.  Index funds are your friend.  There's nothing magical about dividend stocks.

http://www.forbes.com/sites/billharris/2012/09/26/your-retirement-dividends-or-capital-gains/

All investments are in stocks. (approx. 80+ and diversified). 

There are over 8500 domestic stocks and many more international ones.  I'd argue that 80 (any 80) is not very diversified.  I'd do some reading on index funds.  You're also going to want some bonds (or better yet, bond funds) in there as well to smooth out any stock declines.

Wife & I are 52 & 53
I know we have too much in retirement accts. & not enough in taxable....hence my uncertainty if we are ready. 
You have plenty in your taxable accounts.  $316K would cover your spending for 10 years, even at zero growth.  You can access your IRA at age 59.5, or less than 7 years.  Plus you have an additional $120K in cash.  You're fine here.  Better than fine actually.  Good work!

boarder42

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Re: Can I????
« Reply #2 on: August 25, 2014, 06:41:25 PM »
Yes you're in super shape. You're done. Love the good life

rmendpara

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Re: Can I????
« Reply #3 on: August 25, 2014, 07:52:54 PM »
Are we ready to FIRE?  If not, can we at least quit saving?

I think we can stop saving but would like your opinions. 


Yes and yes.

Eric broke it down for you already.

If you can make it to withdrawal age (from various retirement accounts), you already have more than enough saved.

From your $316k investments, I wonder what you have invested in? It seems you are only earnings $4k in dividends, which is ~1.3%. Even a broadly diversified Total Market fund from Vanguard is closer to 1.9%, or almost a $2k/yr difference in dividends. Is this account outperforming the Total market fund in growth? If not, liquidate and go for some broad based fund. It will earn you close to 2% dividends, maybe more, plus be better diversified than your stocks.

Maybe consider paying an advisor a one-time fee to give your their take on your overall portfolio allocation? Shouldn't be too much money. They'll obviously try to sell your their services on an ongoing basis, but you can politely decline or say "I'll think about it", and just pay them for the day's work and be on your way.

Punxsyboy

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Re: Can I????
« Reply #4 on: August 25, 2014, 10:11:49 PM »
Thx for your thoughtful replies & taking the time to do so.    I really pleased that u all think we r good to go...but I'm scared....lol ,,,,I guess I need to grow a pair!!  I did neglect 1 expense & that's charitable contributions which is right around 10% of our annual income....ooops.

 In response to your questions:

Eric: I did not factor in subsidies at the lower income level because I was too lazy to try and figure out what they would be & not sure  how much we would still be earning so may not qualify anyway.  I also wanted to err on the side of it costing more than it truly  will.

Index funds:  This is going to be a difficult one for me.  As I get older and less involved with my portfolio I expect I will switch over to primarily index funds & a bond fund.  But I've been fortunate and really done well with the investing, I wouldn't be in this position otherwise.  Hold on.....my annualized rate of return (CAGR) since 2001, as of this evening is 17.74%  Taaaa Daaaa!!!  Crazy, I know, but I've lucked out and picked some great stocks.....not because I'm smart.....I'm lazy ....I subscribed to Motely Fool stock advisor, & from their recommendations, I managed to buy most of their best recommendations and hold on through all the ups & downs.  My portfolio was down to -1.8% annualized return at one point in 2008 or 2009....I forget which year it was and I " doubled down" with all the available cash I had at the time (I live in Vegas after all... lol).  Long-term buy & hold has served me well.   For my taxable acct. My plan is to gradually transition into the strongest companies of the US dividend champions & challengers...not necessarily the ones with the highest dividend, and still maintain some diversification.   http://dripinvesting.org/Tools/Tools.asp  (you can go to this site & click on the spread sheets under "information") 

rmendpara:  see above  ;) 
I've checked on line for a "by the hour" adviser in Vegas & the minimum they want just to talk to me to do a portfolio analysis & make recommendations is between $800 -$1000.   Call me a cheapskate but I can't bring myself to pay that much.

OK....ready for more suggestions & disagreements with my plan.  :)

Thx Again!