What expense level do I need to get to in order to FIRE?

[wildatheart]

Hello Moustachians!

I hope you can help me answer the age-old FIRE question another way. How low do I need to get my expenses in order to FIRE now?

I'm 53, wife is 52.
401K= $850K
403b = $40k
Savings = $870K
Rental house (no mortgage) = $265k equity, $23k annual income
Original Home: (Mortgage 3%) = $2700 monthly, $300K equity (Kept this for tax deduction)
Wife Pension = $1400 per month starting in 2028.
My SS = $3152 monthly starting in 2036
Wife SS = $754 starting in 2037
No other debt.
2 Moustachian cars that are paid off.

Thanks!
WILDATHEART

[bluebelle]

Hello Moustachians!

I hope you can help me answer the age-old FIRE question another way. How low do I need to get my expenses in order to FIRE now?

I'm 53, wife is 52.
401K= $850K
403b = $40k
Savings = $870K
Rental house (no mortgage) = $265k equity, $23k annual income
Original Home: (Mortgage 3%) = $2700 monthly, $300K equity (Kept this for tax deduction)
Wife Pension = $1400 per month starting in 2028.
My SS = $3152 monthly starting in 2036
Wife SS = $754 starting in 2037
No other debt.
2 Moustachian cars that are paid off.

Thanks!
WILDATHEART

I think some of it depends on how much you think I need....by 2037 you'll have $79,292 coming from your wife's pension and combined SS....do you need alot more than that?   The way I see it you have two retirements periods to fund.....the one before you start drawing pension and SS and the one after

[dandarc]

4% of your retirement assets + "savings" (get this invested in a reasonable portfolio if it isn't already) + home equity on the rental property comes out to just about $80K / year. So, you could likely start taking that today, then add another $60K between pension and SS when those come in. And then still never run out of money, although that floor of $60K / year is pretty good even if you do spend down all of your investments.

If you're looking for a more level spending plan, you can run C-FireSIM to see how that has worked out in the past, taking the SS and pensions into account, but I'd imagine the number would be north of $100K / year.

[ReadyOrNot]

I calculate your NW to be $2.3m.  Divide that by 25 and I get $93k in annual expenses.  That's really impressive.

I'm only at $1.65m NW now.  Hopefully with strong income / savings / investment growth I will be at your level by your age.  Congrats!

[ysette9]

I agree with @dandarc that a cFIREsim simulation is the way to go. Put all of your info in there, including when you will get pension and SS, and then iterate with different spending levels until you reach the threshold success % you feel comfortable with.

The other thing to note is your asset allocation will matter for this, as well as your willingness to be a little flexible with your spending or not. There are a lot of possible permutations there that can lead to a range of retirement spending.

Do you have a target spending amount in mind?

[wildatheart]

Thanks everyone for your input. It really put my mind at ease.
I've set my FIRE date for 3/20/2020!!!
My initial spending will shoot for $8200 per month but when we get rid of this house and child support - I'll be much lower.

Thanks again everyone.

[2Birds1Stone]

Looks like you're good to go!

[Lucky13]

I"m assuming that "Savings = $870K" is *invested* right? not in an actual savings account. :D

[wildatheart]

Yea. It's actually $920k and it's all invested so I can make 2/3 of it liquid within a week.

[Retireatee1]

How did you arrive at those SS numbers?  They seem low considering your NW for 2036, are they in 2020 dollars?

[Dicey]

Thanks everyone for your input. It really put my mind at ease.
I've set my FIRE date for 3/20/2020!!!
My initial spending will shoot for $8200 per month but when we get rid of this house and child support - I'll be much lower.

Thanks again everyone.

Congratulations! Have you given your notice yet? That's when the shit gets real, lol.

[SwordGuy]

How did you arrive at those SS numbers?  They seem low considering your NW for 2036, are they in 2020 dollars?

I think your spouse can collect based on your earnings, not just their own.   Look into spousal benefits.

[Retireatee1]

I took a pass at this with my Retireator tool which I'm testing for the March release.  I made some wild assumptions but came up with a FIRE date of 4/14/2020 with monthly expenses of around $8600.  I'll attach it here for you to review (Microsoft Excel for Windows required).

[Captain FIRE]

How did you arrive at those SS numbers?  They seem low considering your NW for 2036, are they in 2020 dollars?

I think your spouse can collect based on your earnings, not just their own.   Look into spousal benefits.

If the spouse is collecting a pension, her SS is likely impacted by Windfall Elimination Provision (WEP), and if so, similarly there is a spousal offset applied to collecting on his record. (Which sucks because a stay at home spouse who never contributed anything to SS  will collect more on the spousal record than someone who did contribute something.)