Ready to Fire?

[LandoABC]

Could I ask for your opinion about our readiness to FIRE.  I am 55, my wife is 52.  I plan to retire at the end of this year (coming right up...).
 We have no debt.  We calculate our expenses as about $30,000 per year, after taxes.  Our assets, other than a paid off house / vehicles / house furnishings, are:

* $600K 401K
* $180K in savings / CDs
* $170K in Vanguard mutual funds
* Social Security for me would be about $24K / year if I start taking it at 62 (which looks better in FireCalc than waiting until 67)
* Not sure about my wife's social security; probably not much since she has been our household manager, unless it is true she can pull a % of what I do?

My wife works a part time job that brings in about $7K per year, which she plans to continue to work for 5-10 years.

Our plan is to live on my wife's income + savings/Vanguard until 60, then start using the 401K, then start pulling Social Security when I hit 62.  Is there anything we are missing, that you can think of?

Thanks in advance for any advice.  I know this is late in the game to be asking questions.

[RWD]

Based on the numbers it sounds like you are in a good position to FIRE. How confident are you in your projected annual expenses? Have you figured out health care stuff yet?

[Trifle]

@LandoABC  -- With your numbers cFiresim is giving you a 100% chance of success even without Social Security.  Looks like you are good to FIRE.  Congrats!
 
Feel free to come on over and join us in the 2019 FIRE Cohort -- https://forum.mrmoneymustache.com/welcome-to-the-forum/2019-fire-cohort/3050/

[LandoABC]

RWD, Trifele,
Thank you so much for your replies.  We spoke with a health insurance 'salesman' around 6 months ago.  Here are the options as we understand it:
*  My employer offers retiree health insurance, which should last for 8 months or so (I failed to mention that among our assets initially)
*  Our understanding is that at that point we can apply for health care under 'Obamacare', and since our income will be low, the premiums should be very reasonable (around $30/month for a 'silver plan').
*  If 'Obamacare' fails for some reason, private insurance plans exist for around $600/month and health ministries may be a less expensive option.

We have planned for these expenses in the expenses I mentioned ($30K per year).

What a great community to be part of.  Thanks again for your thoughts and advice!

Lando

[frugal_c]

I think you are very well positioned for FIRE. You have 850k invested so that alone could support your $30k lifestyle indefinitely.  Throw ss in and you are set.  Your wife still has some income, even better.  You are young enough that you could still get some kind of employment if the market crashed in the next few years but even without that you would probably be okay.

You should be flexible on your social security start date. I am not American but I assume payouts go up if you wait. If the market is strong at 62 consider delaying. Otherwise go for it.

Is there a penalty for taking 401k before 60?

[Chrissy]

I don't see anything missing.  Honestly, your wife could probably FIRE too whenever you're both comfortable with it.

* Not sure about my wife's social security; probably not much since she has been our household manager, unless it is true she can pull a % of what I do?

You can find out her benefit on the SSA website.

When SHE turns 62, she can collect 32.5% of whatever your amount is at that point (let's assume you do claim at 62, so $7.8k/yr).  Every year she waits, the percentage goes up, until, at age 67, she can collect 50% ($12k/yr).

[RWD]

Is there a penalty for taking 401k before 60?

Not if you do it right:
https://forum.mrmoneymustache.com/investor-alley/how-to-withdraw-funds-from-your-ira-and-401k-without-penalty-before-age-59-5/

[terran]

For the social security estimates, make sure you're getting those from the right place. If you're looking at the numbers on your statement or the social security website that assumes you continue to work at the same salary as was reported to social security last year until you start receiving benefits. If you stop working next year your benefit may be lower depending on your earning history.

[Body Surfer]

Hi. Your numbers are close to ours (although we will have a pension too). Your situation gives me confidence concerning our situation. I won't be retiring until Memorial Day though.

Will you travel much or are you going to be living more conservatively and be more of a homebody?

[LandoABC]

Actually my wife is a homebody that puts down roots deep, while I like to do more traveling, so we will see how it all works out as far as traveling goes.

[LandoABC]

I worked out a social security estimate based on actual income over the years.  The first few years were so low (I was a teenager working on my uncle's farm) that I could work a few years part time in the near future and still draw more social security than if I didn't, if I understand it properly.

[MDM]

Our plan is to live on my wife's income + savings/Vanguard until 60, then start using the 401K, then start pulling Social Security when I hit 62.  Is there anything we are missing, that you can think of?

As it happens to be in the clipboard buffer from another thread:

A couple of spreadsheets and a web tool that work well for calculating an individual's benefit:
- The 'SocialSecurity' tab of the case study spreadsheet.
- The Downloadable Social Security Benefit Estimator (repost) - Bogleheads.org.
- Social Security Calculator
A web tool that evaluates SS benefit start dates for a couple:
Open Social Security: Free, Open-Source Social Security Calculator

[Linea_Norway]

I don't know how your social security works. But here in Norway we can choose to take our's from either 62 or 67. Some smart people have calculated over what paid off. And it only paid off waiting to 67, if you know you are going to be older than 81 years old. By that age, you are going to take out more money in total if you had waited to 67, than if you had started to take out at 62. I think they didn't even calculate the profit you can make on investments, if you had invested the money from 62.
So you should consider for yourself, 81 being the average age of dyeing, whether you are expecting to become older than average, or die younger than average.

[Trifle]

Actually my wife is a homebody that puts down roots deep, while I like to do more traveling, so we will see how it all works out as far as traveling goes.

Same boat here -- mismatch between me and the DH on how much we like to travel.  What I've done this year is to sometimes travel with other friends/relatives, or by myself.  When I thought about doing that before I FIREd, it seemed sad, but it actually has been great.  I think the piece I was not understanding until I was actually FIREd is how the family dynamic would change once I stopped working.  When we were both working we looked forward to vacations as our chance to spend time together.  Once we were both at home -- spending all our time together -- that longing went away.  Not that we need to get away from each other, but one of us going away once in a while is fine.  Both of us get what we want, and it has let me make memories with other people that I otherwise would not have.  YMMV!

[frugal_c]

Line Norway, the way I look at SS or IAS in Canada is as a hedge against the market. The market returns are superior but sequence of returns risk is a very real threat, especially when you are in your 60s.  You don't have to worry about SORR with SS.

With the market being so high I would be tempted to delay if I was at that age and had assets 25x expenses or higher.  If the market crashed you just start taking at that point. If prices stay high then the longer you wait the greater proportion of your expenses that are covered by SS and the less the market matters. I am being a bit theoretical because op is very set even with a 62 age for pulling SS.  I think op only needs about $200k at that point but probably more relevant to people with a bigger gap.

[freya]

Agree with the others, you are good to go!

One thing that hasn't been mentioned:  you will need to carefully manage your tax situation, since you're very 401K heavy and don't have a Roth IRA.  Since you're still working, I suggest opening a Roth ASAP and making a full contribution to it this year from taxable cash.  If you're over the income limit, do it using the back-door route.  Do it again in January.

Once you're retired, you can make annual Roth conversions from your 401K.  The name of the game will be to Roth-convert as much of that 401K as possible before taking Social security, so that you won't be subject to SS taxes and high RMDs later on.  Also, don't forget to tax gain harvest in your first full year of retirement.  It will allow you to sell investments later on with minimal or no tax consequences.  The iORP calculator (search online) will help you get started on planning.