Author Topic: My numbers.. FIRE CALC success rate of 83.9%. Thoughts?  (Read 1499 times)

nyfireguy

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My numbers.. FIRE CALC success rate of 83.9%. Thoughts?
« on: March 17, 2019, 04:22:11 PM »
So I posted this thread about health insurance

https://forum.mrmoneymustache.com/ask-a-mustachian/health-insurance-need-advice/

and then thought maybe I should post the larger picture. So the gist is I'd like to 'retire' soon and I'm 48. My plan would be to travel for at least 1-2 years then find some kind of supplemental income just to not be bored and make a couple of bucks, I don't expect this would be a significant amount.

The numbers are simply this.. I have about 600-650K in investments that are, in theory, liquid, in an investment account and another 750K in a traditional IRA that I can't touch til 59.5 without penalty. By the time I'd 'retire' I'd have about another 40K to put towards expenses as well as  travel so I probably wouldn't draw anything for at least 6 months

Using FIRE Calc and a total of 1,350,000 and a withdrawal pf 60K per year that would equate to $45,863 after tax assuming I stay in New York which I plan to at least for a few years. Based on my personal calculations I believe I would need somewhere between $2800-3000 per month to cover all my expenses EXCEPT Health Insurance.  Using the 3K number that leaves just under 10K for insurance.

I realize this breaks the 4% rule so just wondering peoples thoughts.. I appreciate all the opinions from those who have done it and those looking to even if those opinions are YOU'RE CRAZY..


jim555

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Re: My numbers.. FIRE CALC success rate of 83.9%. Thoughts?
« Reply #1 on: March 17, 2019, 06:20:31 PM »
I think you should consider downsizing your house and getting something much smaller with lower taxes.  I think that would solve a lot of problems.

YttriumNitrate

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Re: My numbers.. FIRE CALC success rate of 83.9%. Thoughts?
« Reply #2 on: March 18, 2019, 09:09:38 AM »
It sounds like you have a lot of spending flexibility (put off travel if market crashes) so your actual success rate might be higher than what is suggested by Fire Calc.
https://engaging-data.com/will-money-last-retire-early/

Cherry Lane

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Re: My numbers.. FIRE CALC success rate of 83.9%. Thoughts?
« Reply #3 on: March 22, 2019, 01:22:27 PM »
Are you sure you'd have to pull $60k to net $45k?  Remember when you sell shares from your investment account you are only taxed on the gains, not the full amount.  So if your shares have doubled in value, selling $60k worth of shares is $30k of income, for which (even in NYS) you are unlikely to be taxed 50%.

Eric

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Re: My numbers.. FIRE CALC success rate of 83.9%. Thoughts?
« Reply #4 on: March 22, 2019, 03:00:29 PM »
Are you counting SS in those calculations?  You're less than 15 years away from collecting if needed.  Here's a good Kitces post on figuring out what your expected benefits are as an early retiree.

Even if you only plan on 75% of these benefits (since that's the worst case scenario), I bet it provides a nice boost to your plan.  But still, your timing may not be great here.  It's been a long time since the last recession, and while no one can predict when the next one will hit, each year we go without one starting means the next one has a better chance.

yachi

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Re: My numbers.. FIRE CALC success rate of 83.9%. Thoughts?
« Reply #5 on: March 22, 2019, 03:11:06 PM »
I agree with Cherry Lane you should look at your taxes closer.
Here's a plan with a 3.91% withdrawal rate:
Spend $2,800 per month on everything but healthcare = 28k
Get MVP Premier Plus HDHP Silver 3 NS insurance for $623.46 per month, $2,500 Deductible  = 10k per year
Spend $9255 on taxes:
$3042.06 on NY State income taxes, based on $53,000 of income, at an effective tax rate of 5.74%
$6,213.16 on Fed income taxes, based on $53,000 of income, standard deduction of $6,300, for an effective tax rate of 11.72%

The above assumes this is all counted as personal income tax, but capital gains are taxed at 0% federally until you take out $38,600, so:
$2,160 on Fed income taxes based on 14400 (53000-38600) taxed at 15%
The savings on federal income taxes means you have an extra $4,053 per year.

I don't want to redo the calculations at the lower withdrawal, so lets add it to spending:
2800+4053/12 = $3,137.75 per month.

By the way, this all assumes you have enough health expenses per year that you actually spend the whole $2,500 deductible.

secondcor521

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Re: My numbers.. FIRE CALC success rate of 83.9%. Thoughts?
« Reply #6 on: March 22, 2019, 08:11:19 PM »
Spend $2,800 per month on everything but healthcare = 28k

$2,800 x 12 > $28k.

OP, I'd just move to a lower cost of living area or stick it out in the job another few years, personally.